The property data firm is standing by its price projections amid fears of an early interest rate rise
House prices will continue to rise despite the looming likelihood of a cash rate hike, according to property data firm PropTrack.
PropTrack is standing by its home price predictions despite a looming interest rate hike, according to a report by The Australian. The REA Group subsidiary projects that growth will slow over 2022, but still flags a 6% to 9% rise in house prices across the combined capital cities.
Cameron Kusher, director of economic research at PropTrack, said the firm’s forecast accounted for a rise in listings, with a likely rise in 2023.
“Our expectation is price growth is going to soften this year anyway – and this was kind of before all the talk of an interest rate hike this year,” Kusher told The Australian. “If anything, this will probably encourage more people to get their properties on to the market sooner and less likelihood of macroprudential policies being introduced to curb some of the exuberance in the market.”
The Reserve Bank originally indicated that the cash rate wouldn’t rise from its current record low of 0.1% until 2024. However, inflation currently stands at 3.5% over the past year, sailing past the central bank’s expectations.
While RBA Governor Philip Lowe has said that it’s too early to tell whether inflation is sustainably in the RBA’s target range, many experts now expect a rate hike at some point this year. Westpac, Commonwealth Bank and AMP have all predicted it could come in the third or fourth quarter, The Australian reported.
AMP Capital is more conservative with its projections than PropTrack, with chief economist Shane Oliver revising his price-growth projections for this year down to 3%, from 5%, based on the prediction that rate hikes will start in November. Oliver expects the market to peak at some point in the September quarter, followed by a 5% to 10% drop in average house prices next year, according to The Australian.
However, a recent analysis from CoreLogic indicates that the true impact of a rate hike will likely lag the hike itself. Comparing the relationship between rate changes and house prices from January 2002 to January 2022, CoreLogic found that rates fell about 84.7% of the time, but rate changes can take up to a year to be felt on the ground.
