Call to Action for Would-be Sellers!

An article that appeared last week in the Australian Financial Review should act as a call to action for all would-be sellers.

Whilst the banking system has downgraded their outlook for property prices over 2022 and 2023, none had suggested that prices had now peaked. This has now changed.

With confidence in the property market declining due to predicted interest rate rises, reduced affordability and the looming federal election, the ANZ have now officially declared that, in their eyes, Australia's property prices have now peaked.

This assessment is not unreasonable based on the fact that much of the predicted price growth this year has already been achieved and with more properties now coming to market, the signs are there that this cycle has in fact peaked.

The next few months will be the most critical phase of the looming change in market conditions and it is our role to advise potential sellers so that they can act accordingly.

Based on the evidence at hand, our recommendation needs to be moving towards a more urgent course of action for those planning to sell.

Every booming property market in history has ended abruptly and the fallout leaves many regretting their decision to postpone selling. Let's make sure our clients are aware of the current environment and what has happened historically following on from a market peak.

There is nothing better than guiding a seller to sell at a great price at the peak of the market.

The ANZ have declared we are now there.

Please see the full article below.

ANZ suspects house prices ‘have peaked’

House price growth across the capital cities is set to slow to 8 per cent this year before dropping by 6 per cent in 2023, the big four has predicted.

ANZ said in an update on Wednesday (16 February) that growth in the property market appears to have peaked after posting the strongest annual gains since the late 1980s.

“Higher mortgage rates, alongside macroprudential tightening, rising new listings and constrained affordability will see house price inflation moderate this year,” said ANZ senior economists Felicity Emmett and Adelaide Timbrell.

“The return of immigration and very low unemployment will be supportive factors, but eventually higher rates will trump the positive fundamentals and prices will turn lower. Lower, but not sharply lower.”

While noting that higher interest rates would likely be the main driver of market weakness over the next two years, ANZ said it did not expect house prices would fall sharply.

“After a peak-to-trough rise in house prices of over 30 per cent since late-2020, a decline of 6 per cent is quite modest, and is unlikely to feed through to sharply lower residential construction or weigh heavily on consumer spending, given very high savings rates and increased buffers,” ANZ said.

ANZ previously predicted a rise of 6 per cent for 2022 and a decline of 3.5 per cent for 2023. It is the latest major bank to revise its house price forecasts.

NAB is expecting a rise of 3 per cent in 2022 and a fall of 10 per cent in 2023, while Westpac said prices would rise 2 per cent this year before dropping 7 per cent next year, predicting a total fall of 14 per cent over two-and-a-half years.

While the big banks also vary on their predictions for the future of interest rates, ANZ currently expects the Reserve Bank to hike rates to 2 per cent by the end of next year.

“Higher rates and possible macroprudential tightening will be key themes in 2022 and 2023. But higher household savings rates give many households strong liquidity buffers coming into 2022,” said ANZ.

“Home owning households are more likely to have bigger liquid buffers, which can be drawn down if needed to service mortgages at higher interest rates. We also expect wages growth to accelerate in 2022, which will provide an offset to the impact of rate increases for many households.