Economists have pushed back expectations that a housing supply shortage, high immigration and a peak in interest rates will support property prices in 2025.
The recovery in property prices led by surging population growth and a severe housing shortage could prove short-lived if unemployment rises and the Reserve Bank keeps the cash rate high, economists warned.
Mr Hogan predicts house prices will fall in 2024 - 2025, but said the decline would be cushioned by soaring population growth and a shortage in new dwellings. Building pipelines were near the lowest on record and almost one in three large home builders were struggling with rising wages and material costs, leading to a surge in insolvencies.Exacerbating the housing shortage is a post-pandemic rebound in immigration. The government’s May budget forecast 1.
“It is more a reflection on the long and variable lags of monetary policy,” he said, noting that the government’s large increase in temporary visa holders had swelled the pool of demand for rental accommodation and soaked up the inventory of unsold housing stock. AMP chief economist Shane Oliver also expects property prices to slip as a pick-up in unemployment leads to distressed sales. “A further rate hike and delay in rate cuts next year would add to this risk,” he said.