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Chatter about rising interest rates is set to slow property price growth in 2022, although the Finance Broker Melbourne is expected to stay on hold until late in the year or 2023, economists say.

After years of ultra-low interest rates, slashed to near-zero to support the economy through the pandemic, the next move is likely to be up.

The timing will be closely watched, and could come earlier than the Reserve Bank’s previous cautious suggestion of 2024.

ANZ expects the first hike in the first half of 2023, Westpac tips February 2023, NAB says mid-2023, while both CBA and AMP Capital predict November 2022.

Retail banks have already been increasing fixed mortgage rates from their trough below 2 per cent to cover their costs, but an official hike – likely the first in a series – will reduce borrowers’ budgets at auction.

ANZ senior economist Felicity Emmett said fixed rates could rise a little further before stabilising, after three-year rates rose more than 80 basis points over the last few months of 2021.

“The days of sub-2 per cent Mortgage Broker Melbourne rates are over for the time being,” she said.

“It will mean that we do continue to see this slowing of house prices, and that’s why eventually we think that by 2023 prices will start to turn down.”

The Reserve Bank wants to see a sustained improvement in wages growth and inflation before it lifts the cash rate, as moving too early could derail the economic recovery.

Ms Emmett expects this won’t be until the first half of 2023, but not everyone agrees.

“There are a lot of people out there that think the RBA will have to move earlier,” she said. “There is a risk the RBA starts to price in rate rises much more quickly than we and the RBA are expecting.”

Westpac senior economist Matthew Hassan said although the central bank will be patient before lifting the cash rate, the case for change could be there by late 2022, ready for a rise in February 2023.

Some traders are expecting an earlier move, but he said wages growth can take time as awards and enterprise agreement negotiations can move slowly.

“Housing is super sensitive to interest rate moves and it’s really run well ahead of the wider economy,” he said.

“The housing market has pretty much ignored Delta and had a strong surge before the economy has regained its pre-COVID levels … it will be much more sensitive to the tightening prospects in 2023.”

He expects housing price growth to flatten by the second half of 2022 as expectations of a rate hike build, and for the property market to fall the following year as interest rates climb.

Commonwealth Bank head of Australian economics Gareth Aird expects the cash rate to start rising at the end of 2022 and increase gradually to 1.25 per cent by the September quarter of 2023.

“There are a lot of households carrying a lot of debt,” he said. “The RBA should get a fair bit of mileage out of the hikes.”

Historically, property prices have lagged cash rate moves, he said, but this time property market momentum will pull back significantly by the time the central bank makes its much-anticipated move.

He expects property prices to peak in the second half of 2022, with growth already restrained by regulatory moves to cut the maximum amount buyers can borrow, and the higher costs of paying back a fixed-rate loan.

RateCity.com.au research director Sally Tindall said regardless of when the cash rate goes up, fixed Mortgage Broker Prahran rates are likely to keep moving up albeit at a slower pace, and some banks could even lift variable interest rates out of cycle.

Over the month to mid-December last year, 52 lenders hiked their two-year fixed rate products and 64 hiked for three-year loans, she said, compared to 11 and one who cut respectively.

In April 2021, there were about 180 fixed-rate products on offer under 2 per cent, but this has shrunk to 61, and such offers are likely to end in 2022, she said.

And the moves are set to hit hip pockets – an average borrower with a $500,000 variable rate loan would face $103 extra on their mortgage each month if their rate rose 40 basis points.

“Hikes in the cash rate will make it more difficult for people [to buy], it will limit how much they can borrow from the bank,” she said. “However, it could also help cool property prices.

“Banks are conscious of not lending out eye-watering amounts of debt that people potentially can’t afford to repay, particularly with interest rate rises looming.”

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Borrowers in New South Wales and Victoria led the sharp rebound in loan commitments.

Australian Refinance Home Loan Melbourne borrowers came rushing back in November last year, driving a rebound in overall value of new loan commitments for housing.

Figures from the Australian Bureau of Statistics (ABS) showed a 6.3% growth in the value of new housing loan commitments (excluding refinancing) to $31.4bn.


The value of owner-occupier housing recovered strongly, ending the five-month period of declines with a growth of 7.6%.

This recent gain in owner-occupier financing was the first increase since May 2021 and the largest since January 2021.

BIS Oxford Economics senior economist Maree Kilroy said two states led the rebound in Best Home Loan Refinance Rates activity among owner-occupiers over the month.

“Coming out of lockdowns, pent up demand to transact saw owner-occupier loans rebound solidly in New South Wales (up 9.6%) and Victoria (up 9.7%) which drove much of the national result,” she said.Mortgage Broker Near Me

Busy month for first-home buyers, investors

The first-home buyer segment also reported gains in the month, breaking the downtrend that started in January 2021.

Over the month, the number of new loan commitments to first-time buyers rose by 1.9%. On an annual basis, however, activity was down 17.4%.


Victorian first-home buyers were the most active, reporting a 12.3% growth in the month. Increases were also seen in New South Wales and Western Australia.

ABS head of finance and wealth Katherine Keenan said investors continued to widen their share in the market.

“Activity in the investor market was also strong. The value of new loan commitments to investors rose 3.8% reaching a new all-time high of $10.1bn,” she said.

Investor lending has already grown for the past 13 months, accounting for around a third of the value of new housing loan commitments.

“The previous investor lending peak in April 2015 accounted for 46% of new housing loan commitments,” Ms Keenan said.

Bluestone Home Loans consultant economist Dr Andrew Wilson said despite the gains in lending activity, recent factors, including the latest COVID variant, could potentially impact the performance of the lending market in the coming months.

“The outlook clearly remains mixed with affordability barriers, the satisfaction of pent-up demand, and uncertainty – and the reimposition of restrictions – regarding the current severe coronavirus outbreak, set to reduce home buying activity over coming months,” he said.

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Record low interest rates have driven Australian housing prices up 22 per cent last year — its sharpest rise in three decades.

Key points:
  • Housing prices rose 1 per cent nationally in December, with regional markets up 2.2pc and capital cities 0.6pc
  • Hobart had the biggest capital city price increase over the past year (28.1pc) while Perth had the smallest rise (13.1pc)
  • Listings in Sydney and Melbourne have recently surged

The nation’s median property price has risen for a 15th straight month. It comes after another 1 per cent gain in December, according to the latest figures from CoreLogic.

But prices have been rising at a slower pace each month, as property became increasingly unaffordable for first-home buyers.

Last month, Australia’s median price rose by 1 per cent to $709,803.Mortgage Broker Prahran

Sydney had a small increase, by 0.3 per cent, while prices in Melbourne fell by 0.1 per cent in December.

“A surge in freshly advertised listings through December has been a key factor in taking some heat out of the Melbourne and Sydney housing markets,” CoreLogic’s research director Tim Lawless said.

Prices in Australia’s two most expensive capitals were also affected by “demand headwinds caused by significant affordability constraints and negative interstate migration,” he added.

While the pace of capital gains has been easing in Sydney, Melbourne and Perth, prices in other capital cities have lifted sharply.

Prices in Brisbane and Adelaide went up by 2.9 per and 2.6 per cent in December, showing a two-speed market emerging across capital cities.

For the second year in a row, prices in regional areas went up at a much faster rate, compared to the capital cities.

Since March 2020, housing values across regional Australia were up 32 per cent, compared to a 20 per cent lift in values seen across the combined capitals.

However, AMP chief economist Shane Oliver said “storm clouds are gathering for the property boom”.

“We expect a further slowing in national home price gains ahead of a peak and then price falls from later this year and in 2023,” he said in a note.

Mr Oliver added that reflected poor affordability, rising mortgage rates and higher interest rate buffers in Australia.

“It’s unclear what impact the latest COVID wave, driven by the Omicron variant, will have on the property market. It will likely reduce buyer confidence, but it could also dampen listings,” he said.

“The 25-year bull market in capital city property prices is likely to come under pressure in the years ahead, as the 30-year decline in Best Mortgage Broker Sydney is now likely over.

“The collapse in immigration over the last two years may help remove the chronic undersupply of Australian housing, and the work-from-home phenomenon may take pressure off capital city prices.”

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There will be an increasing number of Aussies feeling mortgage stress due to higher interest rates, while first home buyers are still in for a massive headache.

First home buyers are hoping for some relief from skyrocketing property prices around Australia but they will still face huge hurdles getting into the market in 2022, while Mortgage Broker Near Me are worried they won’t able to make repayments and even face losing their house.

However, there may be some relief for house hunters in terms of the fierce competition that has defined the 2021 market.

Buying opportunities are looking bright for 2022, with appraisals soaring above last year indicating that a number of homeowners are considering listing their properties for sale in the New Year, according to Domain.

This means the total homes for sale will be brought back into a ‘normal realm’, it added.

Prices are not expected to rise at the same pace as in 2021 with tighter lending reducing buyers’ leverage and wages increases not keeping pace with last year’s price growth, found Domain.

However, it expects that Australians will continue to seek out coastal locations, with beach side popularity continuing to boom. For example, house prices in Somers in Victoria, Byron Bay in NSW and Sunshine Beach in Queensland have increased by 69 per cent, 58 per cent and 48 per cent respectively over the past year.

Buyers will be enticed to hone in on coastal areas that are affordable and poised for future growth in 2022.

Domain chief of research and economics Dr. Nicola Powell said investors will continue to be a growing market segment, unless the lending regulator APRA puts on the brakes.

“It remains a landlords’ market across the most major cities and into regional Australia,” she said. “Investors have had the benefit of rising rents and equity growth, with prices set to continue to rise, albeit at a slower pace than 2021, investors will continue to chase it.”

Regions such as inner Melbourne and Sydney’s city and east, which historically have a high level of overseas migration and student population, will be susceptible to a tightening rental market once international borders fully reopen, the report warned.

How much are prices expected to rise?

Leith van Onselen, chief economist at the MB Fund and MB Super, forecast Australian property price growth to decelerate sharply in 2022, with values nationally to rise by between 7 per cent to 9 per cent.

While Sydney and Melbourne house prices are tracking near historical highs relative to the other capitals, Brisbane’s prices are tracking near historical lows, he added.

This means that Brisbane housing presents exceptional value compared to its larger East Coast cousins, he said.

But Sydney and Melbourne, which have long been the country’s largest hubs for property, are on track to drop by up to 3 and 4 per cent if cash rates rise and regulations tighten, according to Louis Christopher, Managing Director of SQM Research.

He also believes Brisbane is set to defy the trend, with the Queensland capital set to grow by up to 14 per cent next year, he added.

Meanwhile, investment property company Wealthi says that as interest rates start to creep up, there will be a shift in demand for dwellings priced at $700,000-$800,000.

“We’ve seen some crazy prices despite the lockdowns this year,” co-founder Domenic Nesci said. “But we are starting to see some signs that people may not want to buy a property that’s over $1m. People will be looking for more value and affordability.”

What the buyer’s agent is forecasting

Fear of missing out (FOMO) will be banished, as people won’t buy into the hype in 2022, according to buyer’s agent Michelle May, meaning they also won’t race into decision.

“Further increase in supply will thin out the buyer pool. As vendors will look to capitalise on the huge amount of growth over the last 18 months, more listings will mean more choice for buyers and a relatively slower incline in further price rises,” she noted.

“Buyers will be able to be much more discerning, and not jump into the wrong property too quickly without doing their due diligence.”

But with lending rules tightened back in November, Ms May believes it will affect first home buyers the most – taking the market further out of reach for them.

“Those first home buyers that are able to still get into the market will have to turn back to apartments,” she said.

“Otherwise, they risk renting for the longer term as the disparity between apartment and house price increases have been significant.”

With borders opening to international arrivals in December, the return of student and skilled labour immigration will also see more apartments sold and rented in the inner city again, Ms May predicted.

“Vacant apartments targeted to this market have been sitting idle during the pandemic and will now be snapped up again as we see the return of overseas students,” she said.

“As we see the population increase again, we will see more buzz around the apartment market, specifically in university areas.

“Likewise, as we see the rise in skilled labour immigration, the general property choices are also apartments with easy access to transport, schooling and general amenities.

“Affordability certainly plays a factor in this, as well as a typical higher level of acceptance for apartment living from overseas immigrants.”

With her eyes on a number of new Sydney hot spots, Ms May singled out Bexley, Belmore and Arncliffe, suburbs she said have grown exponentially over the last year with more than 30 per cent growth.

“A contributing factor in the shift is that people are being pushed out of the inner west due to higher price points,” she added.

“Funky young couples and families will buy up big in these new hotspot areas. They are great areas for starter homes due to relatively good affordability. Another win-win is that with the upgrade of the metro line, the commute to the city will be around 20 minutes shorter.”

The new Western Sydney Airport is a good news story from a buyers perspective too, added Ms May.

A trend gained momentum in 2021 – virtual buying – will also increase because of expats, immigration and sea and tree changers, added Ms May

“In 2020/21 we saw a sharp decline in auction results because people were really hesitant to buy online or virtually. Now that we have had time to adjust to the concept and this new normal, we will see an increase in virtual buying and online bidding and people being more comfortable to do so,” she said.

What the banks have predicted

It’s the news every young Australian has been waiting for – a drop in house prices but not quite in 2022.

House prices are predicted to fall in Australia in 2023, according to the major banks.

This year, homes rose in value by more than 20 per cent and they’re tipped to rise by 6 per cent for 2022, according to ANZ.

“If our forecasts pan out, housing will be 27 per cent more expensive at the end of 2023 than at the end of 2019,” ANZ economist Adelaide Timbrell warned.

National Australia Bank expects a 4.9 per cent rise as the impact of low interest rates and strong income support during the pandemic begin to fade, NAB group executive of personal banking Rachel Slade.

Westpac has also projected a slow down, with house prices expected to rise by 8 per cent in 2022.

The Commonwealth Bank has forecast a massive 10 per cent drop in Australia’s house prices in 2023 after a startling period of growth that has left new buyers feeling priced out of the market.

While house prices are expected to continue to rise through 2022, CBA’s head of Australian economics Gareth Aird believes interest rates will help settle the market in a few years’ time.

What Aussies are worried about

A Canstar survey of more than 2000 Australians found many were predicting a rise in Mortgage Broker Surry Hills in 2022, with residents in New South Wales and Western Australia the most concerned about the issue.

While Canstar analysis shows the average variable interest rate for owner occupiers has fallen by 0.25 per cent from a year ago, fixed interest rates are trending upwards overall, especially for longer loan terms.

Its database shows 62 variable rates below 2 per cent, up from 14 in December 2020, while the number of fixed rate loans below 2 per cent is currently 79, down from 119 a year ago.

Those surveyed also predicted slower house price growth, it found.

While national housing values rose for the 14th consecutive month in November 2021 according to CoreLogic, the rate of growth was the slowest seen since January.

Canstar’s group executive of financial services, Steve Mickenbecker said Australians are becoming nervous about property in 2022, with 47 per cent of survey respondents anticipating slower price rises, increasing interest rates, higher levels of mortgage stress and foreclosures.

But he said there are signs of a slowdown.

“In the latest data releases, Australian Bureau of Statistics figures are showing home lending in October decreased for home buyers, leaving only investors accelerating, and the pace of house price growth slowing once again in November,” he noted.

“With 23 per cent of Australians expecting an increase in foreclosures and mortgage stress, even before we have seen the cash rate go up, there is limited confidence in our ability to absorb a sustained increase in Refinance Home Loan Melbourne.”

Despite a cash rate that hasn’t moved for a year, interest rates are on the march in both directions, heading down for variable rates and up for fixed rates.

It’s a sure sign that the market expects the Reserve Bank to move up in the coming 12 months or so, he added.

“The fixed interest rate bargains are disappearing from the market for terms beyond 12 months, with all of the competitive action happening in variable rates that the banks can increase at any time,” he said.

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