Analysis: Property prices could fall by more than initially feared as the Reserve Bank ratchets up official interest rates to fight surging inflation.
The bank’s economists expect Melbourne prices to drop by 15 per cent. In May, the estimate was just 11 per cent.is forecasting both Sydney and Melbourne house prices to drop as much as 18 per cent by the end of next year.
Tim Lawless, research director at CoreLogic, says considering inflation is likely to remain stubbornly high for some time – and interest rates are to rise substantially in response – it is likely the “rate of decline in housing values will continue to gather steam and become more widespread”.“Australia’s housing market outlook is becoming increasingly skewed to the downside, with the trajectory of housing values heavily dependent on the path interest rates take,” he says.
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