Aussie house prices tipped to fall by 20% next year

REBEL STORE AUSTRALIA

Get Rebel News Australia merchandise! All our products are printed in and fulfilled from Queensland.

SHOP NOW

• By Avi Yemini

Sign up for Rebel News Australia!

Get updates on Rebel News coverage in Australia delivered straight to your inbox so you never miss a story!

Sign Up

Australian house prices will fall between 15 and 20 per cent in 2023, an investment conference has been told.

Property experts quoted in The Australian said a downturn, caused by rising interest rates, represented a return to “sanity” after prices were inflated during the pandemic.

“If you think about it on a longer-term trend basis, late 2020 and what happened through 2021 in the market here is the clear outlier,” IFM Investors executive director Hiran Wanigasekera told the conference.

“There was a massive overshoot in terms of price appreciation that has to be corrected … so a 20 per cent decline from peak to trough is not out of the question and really only puts us back on to the longer-term trend that has been progressing over the last 10 to 15 years.”

He said a downturn “has to happen” to bring back “sanity” to the market, warning that borrowers who bought at the recent peak would be most impacted by higher rates and price falls.

“The borrower cohort that’s really more exposed than the wider economy is the one that actually took on that leverage and bought in through that time period (late 2020 and 2021), so not necessarily the whole of country is exposed in the same way to higher rates,” he said.

The Citi Australia and New Zealand Investment Conference, held in Sydney this week, attracted more than 1000 investors, fund managers and CEOs from around the world.

Liberty Financial chief executive James Boyle told the conference that even a 20 per cent downturn would only take prices back to “mid-pandemic” levels.

“It’s not like we’re rushing back to GFC kind of price levels,” he said, adding that by October 2023 “we’ll be dealing with a new market where we’re probably 20 per cent lower than we were at the peak”.

The country’s largest listed residential developer, Stockland, warned that housing affordability was “stretched at the moment”, particularly in Sydney, where the percentage of income going into mortgages was in the low 40s.

“Generally 30 to 35 per cent is where we see that as balanced,” he said.