NAB drastically revised its initial outlook for property prices over the next two years after the Reserve Bank flagged that interest rates could rise at some point in 2022
Property prices in Australia will take a turn for the worse midway through this year and by 2023 house prices will plunge by a whopping 11%.
That’s according to the latest NAB forecast, released last Friday.
NAB drastically revised its initial outlook for property prices over the next two years after the Reserve Bank flagged that interest rates could rise at some point in 2022.
In its Residential Property Survey for the latest quarter, NAB warned: With our view on rate hikes coming forward, we now expect the turning point in property prices to occur in the second half of 2022.
Property is set to rise in value by just 3% in the coming year.
Although next year’s 11% decline might seem like a big drop, the report’s author said it was actually quite a controlled plunge.
We see this as a relatively orderly decline, the report noted. It is important to remember this correction comes after a very sharp run up in prices over the last year.
NAB brought forward its predictions of a correction off the back of rising interest rate expectations.
In terms of forecasts, we have brought forward the timing of the correction we expect in house prices to late-2022 as affordability constraints begin to bite and rising mortgage rates place downward pressure on prices, the bank said.
It said: This would offset gains seen in early-2022, so that overall, prices end the year roughly flat. We see this trend continuing through 2023, ending the year around 10% lower.
Sydney and Melbourne will be hit hardest, dropping by nearly 12% each next year.
Both metropolitan property markets will only grow 1.9 and 1.2% respectively for 2022, a snail’s pace compared to previous times.
