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Melbourne house prices could fall by $135,000 by the end of 2023, as forecast by AMP Capital

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Melbourne home prices could fall by as much as $135,500 in just 18 months, according to a financial expert.

Shane Oliver, chief economist at AMP Capital, has forecast that real estate values ​​will fall by five percent by the end of 2022 and by another 10 percent next year.

Oliver’s prediction comes as the Big Four banks released their own forecasts warning that the housing market could plummet in value by the end of 2023.

Commonwealth Bank of Australia is forecasting a 12 percent drop, or $108,240, while Westpac and NAB have forecast a 11.5 percent drop, or $103,750.

Melbourne house prices could drop by as much as $135,500 in just 18 months, according to a financial expert

Oliver's prediction comes as the Big Four banks released their forecasts warning that the housing market could plummet in value by the end of 2023

Oliver’s prediction comes as the Big Four banks released their forecasts warning that the housing market could plummet in value by the end of 2023

ANZ was the most optimistic as it expects a drop of 11 percent or $99,220.

Oliver warned that the drop in market value could lead to homebuyers taking out loans, ultimately paying back more than their home is worth.

“I suspect it will probably be more on the lower end where people, such as first-time home buyers, who have recently moved in with low deposit levels are at greater risk,” Oliver said. realestate.com.au

“And there is a risk that some buyers will have to sell at a loss and then you get supply and demand, which drives prices down.”

PropTrack, which provides insight into the real estate market, revealed that real estate prices have already fallen by 0.37 percent since early 2022.

It predicts that the value will fall by three percent by the end of the year.

Sydney, Melbourne and now Canberra saw prices slip in May after the Reserve Bank of Australia raised spot interest rates last month for the first time since November 2010.

The CoreLogic data showed the first national decline in real estate prices since September 2020 — the era before the RBA cut rates to a record low of 0.1 percent.

PropTrack, which provides insight into the property market, revealed that property prices have already fallen 0.37 percent since the start of 2022 (photo, Melbourne auctioneer)

PropTrack, which provides insight into the property market, revealed that property prices have already fallen 0.37 percent since the start of 2022 (photo, Melbourne auctioneer)

Melbourne property price plummets

Australia’s major banks have forecast that Melbourne house prices will fall over the next 18 months.

AMP Capital and PropTrack also shared their own forecasts.

Below is a list of expected price drops by the end of 2023:

AMP Capital: 15 percent ($135,500)

CBA: 12 percent ($108,240)

Westpac: 11.5 percent ($103,750)

NAB: 11.5 percent ($103,750)

ANZ: 11 percent ($99,220)

PropTrack: 10 percent ($90,200)

Across Australia, the average property value fell 0.1 percent to $752,507, with this figure covering both homes and units.

But in Sydney, house prices in the middle fell an even steeper 1.1 percent to $1.404 million, while apartment values ​​fell 0.7 percent to $829,598.

The upscale Northern Beaches had Australia’s biggest decline, at 1.9 percent, in an area spanning suburbs like Manly and Palm Beach, where homes typically cost more than $4.5 million.

Inland Sydney saw a 1.7 percent decline, with homes in Birchgrove typically selling for more than $3 million.

The north coast and eastern suburbs both had a monthly decline of 1.5 percent, for zip codes like Woollahra, where $4.5 million is the average price.

In Melbourne, house prices fell 0.8 percent to $992,474, while unit values ​​fell 0.3 percent to $629,344.

The inner south of the city, which covers Brighton, where the average house price is $3.9 million, suffered a 1.3 percent drop.

Sydney, Melbourne and now Canberra saw prices slip in May after the Reserve Bank of Australia raised spot interest rates for the first time since November 2010 last month

Sydney, Melbourne and now Canberra saw prices slip in May after the Reserve Bank of Australia raised spot interest rates for the first time since November 2010 last month

House prices in Canberra fell 0.4 percent to $1,070 million.

Hobart’s comparable home price rose just 0.1 percent to $796,595 last month and was stable in the three months to May.

CoreLogic’s research director, Tim Lawless, said affordability issues had deterred buyers as banks raised fixed mortgage rates from historically low levels of 2 percent.

“There has been much speculation about the impact of rising interest rates on the real estate market and the hike in spot interest rates last month is just one factor causing home price growth to slow or reverse,” he said.

‘Now we are also seeing high inflation and higher debt burdens flowing into less demand for housing.’

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