PHOTO: Sydney & Melbourne
Official results for the end of 2021 from property research house CoreLogic are due on Tuesday, but the daily index shows a rapid deceleration in the property markets in December. Sydney median home values increased at the relatively slow rate of 0.3 per cent over the month, while Melbourne values fell by 0.06 per cent.
December can be a quieter month in the housing market due to holidays, but the preliminary price results are a sign the pandemic property booms have slowed.
Deloitte Access Economics partner Chris Richardson is among experts who say the boom is fast dissipating in the Sydney and Melbourne markets. One of the major factors is the prospect of rising interest rates, with one, two and three-year fixed mortgage rates increasing.
“The heat is already out of the market,” Mr Richardson said. “You might see prices increase a little [over 2022], but you won’t see them increase much.”
Nationally, property values increased more than 22 per cent in the 12 months to November. The rapid rise in house prices and concerns about risky borrowing have prompted the prudential regulator to take steps to cool the market, but it’s not clear if there will be further action, and economists are split on the effects this might have on the market.
One major factor driving prices has been record-low interest rates helping support the economy through the coronavirus-induced downturn. This phenomenon has also been experienced overseas.
The Reserve Bank has maintained rates are most likely going to remain at low levels until 2024, but economists and the market are forecasting earlier rises. Mr Richardson said early rate hikes might not result in significant price falls.
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