Commonwealth Bank reveals when property market will ‘reach the floor’
Commonwealth Bank of Australia (CBA) has predicted when it thinks Australia’s property market will bottom out, and when it expects it to bounce back.
In a research note, head of Australian economics Gareth Aird said home prices across Australia were declining quickly.
“We maintain our central scenario that national home prices will fall around 15 per cent - peak to trough - but that forecast is now expected to be realised sooner,” Aird said.
“We expect national dwelling prices to reach a floor in mid-2023 before gradually rising over the second half of 2023.”
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Aird said prices in Sydney and Melbourne were anticipated to decline by more than the other capital cities.
“The expected falls in home prices are significant but context is key,” Aird said.
“Price gains in 2021 nationally were extraordinary and, therefore, a contraction in dwelling prices is a natural response to rising interest rates, given it was record-low interest rates that drove the phenomenal lift in prices in 2021.”
However, Aird said CBA’s prediction was dependent on the Reserve Bank only hiking the cash rate to 2.6 per cent by the end of this year, and then cutting it by 0.5 per cent next year.
“We would anticipate a larger fall in dwelling prices if the RBA takes the cash rate higher than our terminal rate forecast,” he said.
Westpac outlook sees prices lower for longer
Westpac also updated its outlook for the property market, predicting prices to fall over the course of this year and next.
“With prices already moving lower quickly in Sydney and Melbourne, we now see prices nationally declining 6 per cent in calendar 2022 and a further 8 per cent in calendar 2023,” the August Westpac Housing report said.
“This compares to our forecasts of -2 per cent and -8 per cent respectively back in May.
“The ‘peak to trough’ decline within this is around 16 per cent, closer to 18 per cent in the case of Sydney and Melbourne.”
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