East coast prices to fall 10pc: PropTrack

PropTrack warns prices will tumble as much as 10 per cent along the east coast as interest rates bite.

National property prices are expected to decline between 7 per cent and 10 per cent in 2023, according to PropTrack.

Rising rates and reduced borrowing capacity will cause prices to fall up to 11 per cent in Australia’s largest capital cities through 2023, according to predictions from PropTrack.

The data firm’s biannual Property Market Outlook found buyer and seller activity waned through December, as fewer sellers chose to list their homes on the market and buyers sat on the sidelines following an unprecedented jump in the cash rate from 0.1 per cent to 3.1 per cent in just eight months – the fastest tightening cycle in three decades.

PropTrack director of economic research Cameron Kusher said that more expensive cities would fall further.

“With borrowing costs continuing to rise and the subsequent reduction in borrowing capacities, property price falls are likely to continue and accelerate in 2023, with the more expensive cities likely to see the largest price falls,” Mr Kusher said.

“We’re expecting prices to decline by up to 10 per cent nationally in 2023, with greater falls expected in the larger capital ­cities.

“Demand for regional properties is also likely to slow and, given prices have seen stronger growth in these areas than within the capital cities, we expect to see price falls in these markets too.”

PropTrack’s director of economic research, Cameron Kusher

The Reserve Bank is widely tipped to lift rates by a further 0.25 per cent on Tuesday when it meets for the first time this year. The increase would take the cash rate to its highest level since 2012 and further reduce buyers’ borrowing capacity.

PropTrack has factored in a 50-basis point increase in 2023, likely to be handed down in the first half of the year and followed by a period of rate stability. This would cause buyers’ borrowing capacity to fall about 30 per cent from April 2022.

The east coast is expected to record the biggest change in price. The country’s two most expensive cities, Sydney and Canberra, and Brisbane are each expected to experience falls between 8 per cent and 11 per cent this year. Melbourne and Hobart are likely to drop between 7 per cent and 10 per cent

Adelaide and Darwin each proved resilient to the current downturn, but are anticipated to correct between 3 per cent and 6 per cent. Perth is predicted to decline 5 per cent to 8 per cent.

Falling prices come off the back of a 2.3 per cent fall nationally over 2022 after climbing more than 40 per cent through the pandemic boom. Housing costs are down 4.3 per cent from their peak, with a fall of 10 per cent this calendar year to result in cumulative declines of close to 15 per cent.

Mr Kusher said there was a “very real possibility” of a late 2023 cut to the interest rate depending on the performance of the economy.

“The strong labour market, with unemployment the lowest it has been in decades and wage growth accelerating, may also support the housing market,” he said.

Analysis of listing activity on Realestate.com.au found the time it takes for a property to sell has blown out from 10 days in December 2021 to 42 days at the end of last year.