Some of the first home buyer support introduced when the pandemic hit has wound up and demand from first home buyers has fallen.
The HomeBuilder program set up to support construction jobs through the early days of the pandemic has come to an end.
The federal First Home Loan Deposit Scheme is still running and state governments are still offering stamp duty concessions for entry-level properties, although these become harder to obtain as prices rise.
Affordability worsens
Property prices have soared and many buyers can only afford to pay so much, which is a handbrake on further price growth.
Over 2021, Sydney house prices jumped 33.1 per cent and units 8.3 per cent, while Melbourne houses rose 18.6 per cent and units 6 per cent, Domain figures show.
Dr Oliver said a market peak is usually preceded by a period of declining rates of price growth as the gains slow down – they rarely surge and then come to a stop.
“Invariably it’s preceded by a worsening in affordability,” he said.
Correction looms
Once interest rates rise, economists expect housing prices to fall, but the peak is unlikely to be sharp or uniform.
“Over the longer run the more usual cycle for dwelling prices is to have a steep rise followed by a long period of flat, perhaps slightly declining prices,” Mr Hassan said.
“It’s more usual to reach a new plateau and have a period of relative stability. It’s not a pendulum that we swing automatically into a correction phase.”
Westpac forecasts dwelling prices to fall 7 per cent next year and 5 per cent the year after, while CBA forecasts an orderly correction of 8 per cent in 2023, and ANZ tips a 6 per cent fall in 2023, all modest falls in the context of the recent gains, meaning housing is likely to remain expensive relative to incomes.
Smaller capitals could also keep rising for longer as Sydney and Melbourne top out. And expect to see the most sought-after homes still attracting hot competition at auction, while properties with flaws take longer to find a buyer.
Mr Aird said price falls can gather a little momentum of their own.
“Once buyers expect prices to come down, they invariably come down, because buyers tend to hold off in expectation that prices go lower, and then they go lower,” he said.
Article Source: www.brisbanetimes.com.au