Experts are divided on the direction of property prices in Australia, despite the nation’s property market downturn potentially coming to an end sooner than expected. Home values increased by 0.6% in March 2023, the first month-on-month rise since April 2022, attributed to a highly competitive rental market, a sharp drop in homes for sale, limited new building, and a strong return in migration. 

The Sydney Morning Herald gathered comments from different experts. Alan Oster, the chief economist of NAB Group, has updated his predictions, lowering his peak-to-trough forecast from a 20% decline to 12%. He anticipates that house prices will drop by approximately another 3.5%, stabilize, and maintain the same level until the end of the year. Furthermore, he predicts a 4.3% rise in prices in 2024 as the cash rate decreases. Louis Christopher, the managing director of SQM Research, has predicted a national price increase of 3% to 7% if interest rates do not exceed 4%. Additionally, he anticipates that Sydney prices will grow by 5% to 9% this year, while Melbourne prices will increase by 1% to 5%.

However, Jo Masters, the chief economist of Barrenjoey, has forecasted an additional 5.7% drop in prices this year, although she has adjusted her peak-to-trough decline from 16% to 12%. She believes there are still challenges ahead, and that the price improvements so far mainly benefited higher priced Sydney properties. Masters does not expect a broad price increase until 2024, when she foresees a 2% national rise due to interest rate cuts. Dr. Shane Oliver, the chief economist of AMP Capital, predicts that price drops will persist until later this year, considering the quick return of immigration, minimal rental vacancy rates, and limited supply. Nonetheless, he believes that his projection of a 15-20% peak-to-trough decline may be excessively negative. According to Matthew Hassan, the senior economist at Westpac, the majority of the price correction has likely already happened, but he anticipates further declines. He explained that correction cycles usually occur in two phases, with the first phase being characterized by rising rates and significant price drops. He stated that rate cuts will be necessary to stimulate market recovery, but he does not anticipate this until early 2024.

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