A leading economist has raised concerns about the future of the Sydney and Melbourne property markets, predicting a potential decline in prices next year. According to SQM Research managing director, Louis Christopher, house prices in both cities could fall by as much as 4%. This forecast comes in the wake of the cash rate reaching a 12-year high of 4.35% in November.
Christopher’s prediction goes against the opinions of bank economists, who anticipate continued modest growth in the property market. He argues that the market has reached a tipping point, given the combination of a slowing economy and elevated interest rates. However, he clarifies that this does not indicate an impending crash, as there is still a housing shortage in these cities.
Contrary to the expected decline in Sydney and Melbourne, Christopher predicts price rises in Brisbane (4% to 8%) and Perth (5% to 9%). He forecasts that Sydney house prices will range from a 4% decline to a flat result in 2024, while Melbourne will see a 4% decline to a 1% increase.
These predictions are based on a base case scenario involving a cash rate between 4.1% to 5%, population growth slowing to 460,000 or less, and an unemployment rate increasing to 4.5% to 5.5%.
Q: Will the property prices in Sydney and Melbourne crash?
A: The forecasted decline in property prices does not indicate an imminent crash. There is still a housing shortage in both cities, which would be necessary for a significant price crash to occur.
Q: Which cities are predicted to see price rises in the property market?
A: According to the forecast, Brisbane is expected to experience price increases of 4% to 8%, while Perth is expected to see increases of 5% to 9%.