House price falls are set to accelerate in Sydney and Melbourne if the larger-than-expected inflation numbers prompt the Reserve Bank to start raising the official cash rate as early as next week, experts say.
House prices are likely to fall harder in Sydney and Melbourne between now and next year if the higher-than-expected inflation numbers prompt the Reserve Bank toThe risk of a sharper decline in house prices outside the country’s two biggest markets will also increase and could trigger a downturn even in those capitals where home values are still rising.
“The inflation numbers are too big to ignore, so we now expect the RBA to start hiking at its May meeting next week and by 0.40 per cent, which will take the cash rate to 0.50 per cent.“The RBA probably doesn’t want to wait until after the election, and until after they get the wages data on May 18. With the inflation coming in well ahead of their own expectations, let alone economists’ expectations, I think there’s a very strong case for them to start raising next week.
AMP is forecasting prices to fall by about 10 per cent between now and the end of next year as a result of the earlier and sharper rate increases.Even before a rise in the official cash rate, a lift in average fixed rates, affordability constraints and higher levels of supply have started to put downward pressure on property prices, which have already started to slip across Sydney and Melbourne, said Eliza Owen, CoreLogic’s head of research.
Melbourne’s median house price fell by 0.7 per cent, the first quarterly decline since the June quarter of 2020, while unit prices tumbled by 2.2 per cent – the steepest quarterly decline in five years. Sydney’s premium markets led the decline, with house prices slumping by 6.5 per cent in the first three months. The eastern suburbs, Ryde and the northern beaches, posted price declines of 5.4 per cent, 4.9 per cent and 0.5 per cent respectively.
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