Australian real estate: House prices to drop by as much as 15% in next 18 months

House prices could plunge by as much as five per cent in the next five months and are expected to be down by 15 per cent by the end of next year.

House prices could plunge by as much as five per cent in the next five months and are expected to be down by 15 per cent by the end of next year.

That’s according to the PropTrack Property Market Outlook July 2022 Report, released on Wednesday evening.

The report found that house and unit values will fall between two and five per cent nationally for the rest of the year.

But next year the results were even more extreme, with values forecast to plunge between seven and 10 per cent in 2023, with the report’s author noting that would “potentially bring prices down 15 per cent from current levels”.

Sydney and Melbourne prices are set to fall the furthest by the end of next year.

Driving the downward trend was rising interest rates scaring buyers away from the real estate market.

Sydney and Melbourne are expected to fall the most in price.

Sydney and Melbourne are set to lead the falls, with prices declining between three and six per cent respectively, this year, and nine and 12 per cent for 2023.

Brisbane is mostly in the clear for the remainder of this year, expected to decline only by around one per cent.

However, next year the Queensland capital is expected to drop by as much as nine per cent.

Similarly, Hobart will decrease anywhere from one to four per cent this year, while Canberra is sitting on a three to six per cent decrease and Darwin is straddling zero to three per cent.

Meanwhile, for 2023, Hobart and Canberra are slated for a seven to 10 per cent decline while Darwin is expected to see a four to seven per cent fall.

PropTrack Director of Economic Research and report author, Cameron Kusher, said: “The recent run-up in prices, coupled with reducing borrowing capacities as interest rates rise, is likely to see price falls broaden and then accelerate further into 2023, with the more expensive cities expected to record the largest price falls.

“Nationally, we are forecasting prices to fall by between two and five per cent by the end of this year and by a further seven to 10 per cent by the end of next year.”

Regional areas are also declining after an unprecedented two years.

And it’s not just capital cities; the regional property sector is also set to suffer following two years of massive growth.

The greatest decreases in preliminary sales over the first six months of this year relative

to last year were in regional NT (-24.9 per cent), regional Victoria (-17.3 per cent), and regional NSW (-17.0 per cent).

That said, “The slowdown in property price growth is more evident across the combined capital cities than it is in the combined regional markets,” the report noted.

Bucking the trend are two unexpected cities, Adelaide and Perth.

Both cities are set to experience some price growth in the next year, at two and five per cent respectively.

It comes as Australia recorded an unprecedented 34 per cent increase in prices for homes since 2020 when the pandemic began.

Originally published as Australian real estate: House prices to drop by as much as 15% in next 18 months