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House prices could potentially fall by 4% over the next year under the worst-case scenario by SQM Research.<\/p>\n
SQM’s Housing Boom and Bust Report 2022 analysed four scenarios that could impact house prices next year.<\/p>\n
The report’s base case assumes that the cash rate will remain unchanged, but the Australian Prudential Regulation Authority (APRA) will introduce further restrictions on lending by June 2022.<\/p>\n
Under this base case scenario, price falls in some cities are expected as early as mid-2022, which could lead to prices ending the year with only up to 5% annual growth.<\/p>\n
SQM Research managing director Louis Christopher said the national housing market is starting to show signs of a peak as the current year ends.<\/p>\n
“We expect the market to peak in 2022, with further expected intervention by APRA, which could come as early as next month, halting the price momentum.<\/p>\n
Mr Christopher said if prices do not slowdown by next year, it is possible that APRA will keep rolling out changes to lending until gains ease.<\/p>\n
“We cannot afford another year of 20%-plus gains across the national housing market,” he said.<\/p>\n
“And so, to ensure a soft landing for the market, it is best we see additional intervention sooner rather than later to reign in property valuations.\u201d<\/p>\n
Prices at the worst-case scenario<\/h2>\n
Under the worst-case scenario, the study posits further APRA intervention by as early as March 2022, with the cash rate increasing to 0.25% – 0.5% by the first half of the year.<\/p>\n
Against this backdrop, prices are expected to end the year 4% lower.<\/p>\n
Brisbane is set to defy the overall downtrend and is projected to realise gains of 3% to 6% in this scenario.<\/p>\n
Sydney and Melbourne to slow down<\/h2>\n
Under all scenarios, Sydney and Melbourne are likely to record price declines.<\/p>\n
The additional restrictions that could be imposed by APRA will hit the two cities the most.<\/p>\n
Melbourne, in particular, could also be further affected by interstate migration.<\/p>\n
There could be a positive trend, however, in these two cities’ unit markets.<\/p>\n
SQM predicts unit rents and prices to outperform houses in these two state capitals in 2022, with the expected rise in net interstate and overseas migration as border reopens.<\/p>\n
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Photo by Jessica Tan on Unsplash.<\/em><\/p>\n<\/p><\/div>\n
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