According to ANZ’s latest housing report, capital city property prices are set to fall 18% over the balance of 2022-23, before climbing by a modest 5% in late 2024. 

While Sydney and Melbourne are expected to bear the brunt of falls, the report noted all capital cities, including regional areas would be impacted.

ANZ senior economists Felicity Emmett and Adelaide Timbrell said the steep increases in mortgage rates between May and end-2022 along with reduced borrowing capacity are the main drivers for declining property prices.

“Our forecast for the cash rate to reach 3.35% equates to a reduction in borrowing capacity of nearly 30%,” Ms Emmett and Ms Timbrell said.

“This reduced ability to pay up will drive prices lower over coming months.

“Already housing finance data show that average new mortgage sizes are beginning to fall.”

The report also noted that while low unemployment, rising household incomes, tight rental markets, and increasing immigration will cushion the fall of house prices, rates would need to decline to see the market pick up again.

“In 2024, we expect to see the beginnings of a recovery in house prices, alongside cuts in the cash rate in the second half,” Ms Emmett and Ms Timbrell said.

AMP Chief Economist Shane Oliver expects a 15-20% top to bottom fall in property prices, assuming the cash rate tops out around 2.6% early next year.

“Sydney, Melbourne, and Canberra are likely to see 20% or so falls. Brisbane, Adelaide, and Hobart are likely to see 15% or so declines while falls are likely to be only around 5-10% in Perth and Darwin,” Mr Oliver said.

“But money expectations for a 3.5% cash rate could push this to a 25-30% fall.”

In terms of construction activity, the ANZ report predicts a 16% decline over 2023-24 as “higher mortgage rates constrain lending”.

However, renovation activity and the backlog of work in the pipeline will support construction for the remainder of this year.

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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees Max LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkComparePromoted ProductDisclosure
6.04% p.a.
6.06% p.a.
$3,011
Principal & Interest
Variable
$0
$530
90%
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Disclosure
5.99% p.a.
5.90% p.a.
$2,995
Principal & Interest
Variable
$0
$0
80%
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  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
 Disclosure
6.09% p.a.
6.11% p.a.
$3,027
Principal & Interest
Variable
$0
$250
60%
  • No annual fees – None!
  • Get fast pre-approval
  • Unlimited additional repayments free of charge
 Disclosure
5.69% p.a.
6.16% p.a.
$2,899
Principal & Interest
Fixed
$0
$530
90%
  • Available for purchase or refinance, min 10% deposit needed to qualify.
  • No application, ongoing monthly or annual fees.
  • Flexibility to split your loan with both fixed and variable rates
 Disclosure
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Important Information and Comparison Rate Warning

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