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What are the experts predicting for Sydney?
- CBA is predicting a fall of 11% this year, and an 18% peak-to-trough fall by the end of 2023. This is based on the cash rate rising to 2.1%.
- ANZ predicts a fall of 10% this year and 10% by the end of 2023. This is based on an expected cash rate of 2.6%.
- The RBA predicts that a 2% increase in interest rates could lower housing prices by 15% nationally over two years.
What is happening right now?
In response to rising interest rates and emerging inflation data, consumers are losing confidence in the housing market. Sydney prices have already fallen by 5.2% between April and August 2022. Real estate agents are observing a significant decrease in inquiries and auction clearance rates. These facts signify a weakening housing market.
As interest rates rise, the borrowing power of buyers is dropping. Buyers that are yet to buy may need to return to their broker as their pre-approval expires. Banks are unlikely to lend the same amount to those who have stretched themselves.
Is now a good time to buy?
No one has a crystal ball when it comes to house prices. For example, house prices were predicted to fall during the onset of COVID-19 but instead grew at record levels.
When thinking about buying a house or unit in this economic environment, here are some tips:
- Make sure that you are borrowing within your means, factoring in potential rate rises of up to 2% over the coming years.
- Factor in a decrease in prices when making an offer for a property. That way, you insulate yourself from any downward trends.
- Make sure you have a valid pre-approval.
