Perth house prices to keep falling for two more years, warns ANZ
Home owners in Perth could face another two years of pain with one of the nation’s big banks predicting house prices in the city will fall this year and next.
The ANZ, which now believes official interest rates won’t be moved upwards until well into the second half of next year, believes the country is facing a property correction that will hit almost every capital city.
While Sydney and Melbourne are tipped to fall about 10 per cent since their most recent peaks, the fall in Perth won’t be as severe.
It reckons house prices in Perth will edge down three per cent this year and another one per cent in 2019.
That would take the fall in house prices across Perth well into their sixth consecutive year.
The only markets where ANZ believes house prices will climb this year and next are Canberra and Adelaide, with the bank believing even the hot Hobart market will cool in 2019.
“The housing market is weaker than we expected. Instead of prices stabilising in the first half of 2018 they have continued to decline,” it said.
Last week Reserve Bank governor Philip Lowe said it was most likely the next move in official rates would be up.
But the timing of that increase is proving difficult to pin down.
The ANZ said while the overall economy was improving, the fall in house prices would become an issue for the RBA.
“We think that our expectations – a decline in unemployment toward 5 per cent, a gradual acceleration in wages and a lift in core inflation above 2 per cent – support the case for a higher cash rate at some point. But the weaker outlook for housing will also matter, in our view,” it said.
“While the RBA doesn’t focus on house prices specifically, we doubt it will be comfortable tightening if house prices are still falling as that would add to the downside risks for the economy at a time when the inflation outlook doesn’t require an aggressive approach.”
Financial markets believe the RBA may not lift rates until early 2020.