Property market faces possibility of ’dead-cat bounce’ and more falls ahead

Experts are warning the stabilisation of property prices may be short lived, with more falls possible if a flood of new homes hit the market.

House prices may fall further, economists say. Picture: The Sunday Telegraph/ Monique Harmer

The property market may be in the midst of a “dead cat bounce”, with the current stabilisation of prices likely to be shortlived as interest rates continue to rise, fixed mortgages expire and more homes are listed for sale.

February’s home values data from PropTrack showed a plateauing of price falls in most capital cities, with CoreLogic’s daily indices tracking to show Sydney growth at 1 per cent in March.

Experts are warning it is too soon to call the bottom of the market. Buyers now have the power and are waiting for more homes to come on the market, says PropTrack’s director of economic research Cameron Kusher. Homes are taking longer to sell than a year ago as people become more discerning against the threat of more rate rises.

“It’s a lot harder to get a buyer to say yes in this market,” Mr Kusher said.

“The last thing that someone wants when they’re buying … is to find that there’s a better property on the market cheaper in a couple of months.”

Mr Kusher said low listing levels had cushioned the market, but this might soon change.

This view was backed up by HSBC chief economist Paul Bloxham, who said interest rates would be the deciding factor.

AMP chief economist Shane Oliver said he was “sceptical” to call the bottom of the market, particularly as he could not recall seeing a rebound without some form of economic stimulus.