What analysts expected for prices and rates
Forecasts reported by ABC News centred on two linked numbers. CoreLogic’s property analyst expected Melbourne prices to wipe out all pandemic-era gains by February, adding that Melbourne was the only state capital whose prices had fallen that far. The same analysis said prices had already fallen about 8% from their high, meaning roughly another 9% decline could follow.
On rates, the research note cited expected one more 25 basis point increase in early 2023, taking the cash rate to 3.35%. The same note continued to expect a rate cut at the end of 2023, with a 50 basis point cut in the fourth quarter of 2023. If rate rises were too aggressive and the economy entered recession, the analysis said prices could fall about 30% from the pandemic-era peak.
Why falling prices did not automatically mean easier affordability
This is the question most Australians wanted answered. Would house prices keep falling? Signs pointed to housing becoming more affordable for people who had been struggling to enter the market. If the property market fell, many Australians’ wealth would fall with it. So the same price decline produces two different experiences: it eases entry for those outside the market, while eroding the wealth of those already in it.
Where the range of outcomes came from
The gap between the base case and the recession case is the gap in assumptions, not a contradiction. The roughly 8% decline already recorded was the starting point for the analyst’s projected further 9% fall. The 30% figure was conditional — it applied if rate rises were too aggressive and the economy entered recession. The rate path itself was split in two: a further 25 basis point rise in early 2023 to 3.35%, then cuts from the end of 2023. Readers tracking affordability should separate the unconditional expectations from the conditional downside scenario.
FAQ
Is Australian housing still expected to become more affordable? Signs indicated housing was becoming more affordable for people who had been struggling to enter the property market, and that they would welcome it.
Could Australian house prices fall by 30%? The analysis said that if rate rises were too aggressive and the economy entered recession, prices could fall about 30% from the pandemic-era peak.
What rate path did the research note expect? It expected one more 25 basis point increase in early 2023, bringing the cash rate to 3.35%, and continued to expect a rate cut at the end of 2023, with a 50 basis point cut in the fourth quarter of 2023.
How far had prices already fallen at that point? The cited analysis said prices had already fallen about 8% from their high, implying roughly another 9% decline could follow.