According to The Australian Financial Review, the housing downturn could be over in the next 12 months – a significantly shorter run than previous cycles – but prices are set to fall sharply in the meantime as interest rates jump higher, experts say.
The subsequent recovery is also forecast to be slower, and it will take years before prices hit a new high.
Shane Oliver, AMP Capital chief economist, said the bigger and faster rate rises, high inflation, poor affordability and surging supply would fuel steeper declines in house values in the next six to nine months.
“Our base case is for prices to fall 20 per cent top to bottom, assuming the interest rate will peak at 2.6 per cent, but there is a risk that it could go up to 3 per cent and above, which will trigger sharper price declines,” Dr Oliver said.
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