House price in some of the Australian suburbs have almost doubled in last 2 years. Some suburbs such as Byron Bay has seen its property price rise by 107.3% just in 2021. Its scary rise. Minyama in Queensland house price shot up to 82% just in 2021. The main reason for price rise in 2021 was FOMO (Fear of missing out) and low interest rate. People were paying crazy price for properties. But now housing market has started cooling down. Its good news for first home buyers or people who are waiting to buy another property.
Reserve bank may increase official interest rate on this 3rd May Tuesday meeting. I believe due to high inflation RBA may increase interest rate by 40 to 50 basic points. Market is expecting official interest rate may be 2.5% or more by end of 2023. If interest rate increases 2% then monthly repayment on $600,000 surge by $625.
Chief economist at AMP capital Shane Oliver says house price in Sydney and Melbourne could fall 15% by end of 2023 or early 2024. Some experts predict house price may fall 8 % to 10 %
Sydney’s median house price is $1,410,128 at the end of first quarter of 2022. 15% fall would see property price would fall by around $210,000.
Brisbane Median price is $856,000 and 15% fall means $128,400 lower house price
Melbourne median price is $999,000 so 15% fall means $149,850
If price will fall 15% then Perth median house price will sink to a June 2009 low.
Why house price falls when interest rate rise?
When interest rate rise borrowing capacity decrease, so people cannot pay high price for house prices. Vendor must decrease asking price if they want to sell their property.
It is beyond anyone’s guess what house price will do in next 1 to 2 years but if increase rate rises house price will go lower.
What is your view on house price?
Many people are stressed due to not being able to buy house. Health is very important, you can not control what house price will do but you can control your health. If you are suffering high blood pressure you may like to check out how I lower my high blood pressure with some simple tricks.
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