The non-stop rise in house prices may hit its apex this year, according to the latest expert predictions.
The Finder RBA Cash Rate Survey revealed the majority of economists (68 per cent) believe prices in NSW will hit their peak this year while the remainder believe it will come in 2022.
"Many feel that these increases can’t keep going indefinitely and our panel tends to agree. Expect the current rise in prices and activity to peter out by 2022,” Graham Cooke, head of consumer research at Finder said.
“For first time buyers, this means that the bottom rung of the housing ladder should stop becoming steeper within the next six months.”
Australian house prices ticked up 1.9 per cent in the month of June, bringing annual growth in the 2020 financial year to an eye-watering 13.5 per cent, according to figures released by CoreLogic.
Even property prices in Perth – which marked the lowest annual growth of all the cities – rose by 2.1 per cent.
Housing ‘unaffordable’ for the average Aussie
Cooke explained that the rising property prices have led to unprecedented borrowing.
ABS data shows that Aussies borrowed $75 billion in the first four months of 2020, compared to a record $48 billion in the first four months of 2020.
Noel Whittaker from QUT pointed out that said you only need to look at the average wage numbers against the average house price to understand why housing is getting more and more unaffordable.
In fact, Tony Makin of Griffith University warned that a real estate bubble is emerging due to extremely low interest rates.
Outlook for property prices
But despite predictions that property prices may reach their peak in the short term, experts expect we’ll have to wait until 2022 to see more affordable property come onto the market.
“Positivity around housing affordability is still low, but if expert predictions of prices peaking later this year are true, 2022 could prove a much better year for housing affordability,” Cooke said.
“Anyone saving for a deposit now could start to target a purchase next year.”
Also read: Step-by-step: The 7 stages of buying a home