PROPERTY PORTFOLIO
MARKET
APPRAISAL
Cool change to give the property market a breather.
WORDS NICK NICHOLS A COOLING OF THE national housing market has been forecast for 2023 by Australia’s major banks, and this is seen as a welcome breather for property prices. However, even the most pessimistic outlook highlights expectations of a soft rather than hard landing – and, even then, this will come after another round of growth in 2022. In other words, the property market still has some wind in its sails. That’s understandable after a stellar 2021 when capital city prices nationally grew more than 21 per cent. The Commonwealth Bank of Australia’s (CBA) head of economics, Gareth Aird, offered shock value with his forecast for house prices in 2023 with expectations of a 10 per cent fall. Westpac’s Bill Evans calculates a 5 per cent fall, in line with the NAB at 5 per cent and ANZ at 4 per cent. Mr Aird recently changed his outlook of modest gains in 2023 due largely to rising affordability constraints and potential interest rate rises.
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The Reserve Bank of Australia is widely expected to lift interest rates in 2023, and that is reflected in major banks increasing their fixed mortgage rates. CBA and AMP Capital are predicting a rate rise as early as November 2022. However, taking a closer look at the CBA’s dour forecasts for house prices in Australia’s capital cities, it’s hard to ignore that Brisbane is the only market expected to eke out a marginal gain over the next two years. CBA is expecting a relatively modest gain of 7 per cent for combined Australian capitals over the next 12 months, although the pace of growth markedly differs between cities. Perth is expected to show the weakest growth at 3 per cent in 2022 and then pull back 9 per cent in 2023. For Sydney, CBA sees an increase of 6 per cent in 2022, followed by a 12 per cent drop next year. However, Brisbane is expected to see gains of 9 per cent this year, followed by an 8 per cent fall in 2023.
In percentage terms, that makes Brisbane the only capital city that is expected to remain in positive territory over the next two years. Opinions from the experts may vary on other markets, but the consensus indicates south-east Queensland remains the one to watch. It’s worth noting that forecasting property prices is difficult, and more so in these times when so many variables are in play. And it should be remembered that the major banks had widely forecast a housing slump in 2020 as the pandemic lockdowns began to bite, only to change their tune as the market did the opposite. AMP chief economist Shane Oliver, who is tipping a 7 per cent rise in 2022, is also among Australia’s leading economists who see interest rates rising in November 2022 creating softer market conditions in 2023. However, Dr Oliver is also hedging his bets by underscoring the impact of a return to normalised international immigration by then and the impact of macro prudential tightening measures to halt credit growth.
