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Economist Refutes 10% Price Drop

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Speculation that property prices may fall by more than 10% have been quickly refuted by economists. Commonwealth Bank last week forecast price falls by 2023 as high as 12% in Sydney and Hobart, 10% in Melbourne and Canberra, 9% in Perth and 8% in Brisbane, Adelaide and Darwin.

Economist Dr Andrew Wilson of Bluestone Home Loans has dismissed the predictions which he says are based on the presumption of a sharp increase in interest rates. Wilson says while the market may soften in 2022 the predicted prices drops are “nonsensical”. He says rising affordability barriers and lower demand will reduce the pace of price growth, but prices will still grow.

Wilson says since 1987, Australia’s capital city housing market has experienced only three years where home prices have fallen – 2008, 2011 and 2018. “The price declines were clearly modest, falling by just 4.0%, 4.1% and 5.1%,” he says. Wilson predicts once international borders reopen and migration recommences, that will put upward pressure on home prices.

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