Projected fall is more than double previous forecast
Brisbane house prices could tumble as much as 15% from peak to trough – nearly double what was previously forecast – with values having plummeted more steeply than predicted since interest rates began climbing, according to ME Bank.
House prices in Adelaide are predicted to fall 13%, also more than double the bank’s previous forecast, according to a report by The Australian Financial Review.
The other capital cities are also on track to post steeper drops than expected, with Sydney set to fall up to 20%, Melbourne and Canberra projected to drop by 15%, Hobart by 17%, Perth by 8% and Darwin by 7%, AFR reported.
In June, ME Bank predicted that Brisbane house prices would slide 8% and Adelaide prices would fall 6%. The bank also projected a 15% fall for Sydney, 11% for Melbourne, 10% for Canberrra, 3% for Perth, 12% for Hobart and 4% for Darwin.
But prices have tumbled dramatically in most capitals since interest rates began climbing in May, pushing the bank to revise those forecasts, AFR reported. Sydney dwelling values have fallen 8.5%, Melbourne 5.4%, Brisbane 3.4% and Canberra 4.3%.
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Peter Munckton, chief economist at ME Bank, said the large declines sparked the bank to downgrade its forecasts, especially for Brisbane.
“I was just surprised about how much Brisbane house prices have fallen in the past few months,” Munckton told AFR. “It has been a lot quicker and sharper than I’ve anticipated. For Adelaide, it was a case of the market doing too well, which has stretched valuations to very high levels compared to earlier in the year. For the rest of the capital cities, further interest rate increases will reduce people’s borrowing capacity even more, which means further declines in house prices are likely in coming months.”
The more pessimistic outlook was mirrored by subdued auction data during the September quarter, AFR reported. Clearance rates fell to 56.4% during the quarter, the lowest in more than two years, according to data from CoreLogic.
Tim Young, research director at CoreLogic, said the traditional spring bounce had not yet materialised.
“So far this spring has been an extremely quiet month for new listings flowing into the market,” he told AFR. “Seasonally, spring is usually the peak time for sellers to list their property, but this hasn’t materialised, with the majority of cities and rural areas yet to see the normal seasonal upswing in freshly listed properties hitting the market. Vendors may be less motivated to take their property to auction due to lower-than-average clearance rates and a less active bidding environment.”
