We know that Australian house prices fell 5% during calendar 2022.
Based on recent falls in home lending we are forecasting a 6.7% fall in the median house price across Australia for the year ending March 2023.
And looking further ahead we now expect an 13% fall in median house values across the country for the 2023 financial year.
This is what happens when interest rates rise nine times in as many months and home lending tanks as a result.
In simple terms, if you bought a house in June last year, it could be worth about 13% less by June this year.
As of June, last year the Australian median house sales price was around $1.065 million.
By the end of this June, we think the median selling price would be about $926,000.
That’s a fall just shy of $140,000.
If the RBA keeps lifting the cash rate and the banks continue to pass on the pain, then further falls in selling prices can be expected.
Yet the RBA – nor has any other major western national banking regulator in the past – kept rising official interest rates during periods of rapid (i.e., over 10% per annum) falling house prices.
We are once again entering uncharted waters and I do wonder if the RBA – and by extension the federal government – are up to the task.
And more on that topic next week.
Until then, two charts are included in this post.
Until then,
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