Property market turnaround touted for 2023: CoreLogic
A national market turnaround could come as soon as 2023 if inflation eases, according to leading property researcher CoreLogic.
Eliza Owen, CoreLogic’s Head of Residential Research Australia, said inflation was expected to remain high for the rest of 2022, with a combination of domestic and international factors, including the Ukraine invasion and COVID-19, putting upward pressure on prices.
But she said some respite was in sight.
“There are early signs of relief in supply and demand pressures in the economy,” Ms Owen said. “In the US, a build-up in inventory is seeing retailers mark down the cost of some goods, while global input and commodity prices have also started to ease.
“Money markets are indicating a lower peak in the cash rate than originally anticipated a few months ago, and the Commonwealth Bank of Australia has suggested Reserve Bank of Australia cash rate cuts could be in store as early as next year.
“If these trends in easing inflation begin to manifest more widely, it could signal a floor for the housing market decline as early as 2023.”
Mont Property Managing Director Matthew Podesta welcomed the forecast, but said the Perth market was already showing great resilience.
“Perth has been going through an adjustment due to back-to-back interest rate rises and a general hesitation to engage in discretionary spending, but the reality is our city has been showing strength and resilience well above the bigger eastern states capitals,” Mr Podesta said.
“If Perth continues to show buoyancy in the property market, I would expect to see a turnaround sooner rather than later.”
CoreLogic cited Australian Bureau of Statistics data that shows annual inflation in non-discretionary spending, like fuel, food and housing, was almost twice as much as discretionary spending in June 2022 – hitting hip pockets hard.
“The implication is that mortgage holders are likely to feel more of a pinch in their household budgets, with rising rates adding significantly to mortgage costs at high debt levels, while households may find it difficult to fund these costs by cutting back on things like fuel and food,” Ms Owen said.
“Instead, discretionary spending is likely to shrink more quickly over the coming months.”
Latest CoreLogic data shows there have been subtle dips in property values in Perth, but those fluctuations are well below what many other capital cities are enduring.
In August, Perth real estate showed a slight fall of 0.2%, but overall property prices were still 4.9% higher for the year.
The most significant losses were in Sydney where property prices fell by 2.3% in August and Brisbane, which took a hit of 1.8%.