Bank predicts house price falls will accelerate
Australia’s property “collapse” is accelerating, according to forecasts from Commonwealth Bank;.
Australian property prices have continued to fall, and experts predict the downturn still has a long way to go, The Australian reported. Selling prices fell across all capital cities in August. Prices plummeted more sharply in Sydney, Melbourne and Brisbane, while smaller declines were posted in Adelaide and Perth.
A forecast from CBA said the price falls would have the same impact, but would happen faster than first predicted.
“We did not change our expectation that national dwelling prices will fall from peak to trough,” the CBA update said. “But now we see that trough reached sooner given prices are falling at a slightly quicker pace than we anticipated. Our expectation that the RBA cuts the cash rate by 50bp in H2 2023 sees home prices rise modestly on our central scenario over late 2023.”
CBA said the market’s current slide “can only be described as a collapse in prices.”
However, CBA said that if the Reserve Bank lowers the cash rate in the second half of 2023, home prices are likely to rise, The Australian reported. The Sydney and Melbourne markets would likely be the most responsive initially to RBA cuts, since they were the first to see price falls.
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The value of new loan commitments for housing fell 8.5% in July, according to new data from the Australian Bureau of Statistics.
Commitments for owner-occupier housing fell 1.9%, but were still 13% higher than a year ago, and still at their second-highest level after hitting a record high in June.
Commitments for investor housing rose 0.3%, but were 3.1% lower than a year prior, The Australian reported.
