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House price growth to fall in 2023: ANZ Research

The growth of housing prices is predicted to slow next year, before dropping the year after, according to the major bank.

Australia and New Zealand Banking Group (ANZ) has released its latest update regarding Australia’s housing market, predicting that price growth will gradually decline in 2022 before declining the following year.

The report, which was released late last week (18 November), predicts that, as a result of these factors, the average increase to housing prices in capital cities will be roughly 6 per cent during 2022. 

However, during 2023, it speculates that growth will drop by around 4 per cent.

This forecast contrasts the expected peak of house pricing growth, which is predicted to reach above 21 per cent by either this month or December this year.


According to the report, this would be the strongest growth since the boom of the late 1980s. 

As for what’s behind this trend, ANZ speculates that the combination of increasing unaffordability, the recently introduced macroprudential regulations and growing mortgage fixed rates will combine to dampen this surging momentum. 

Furthermore, the report noted that “the recent weakness in housing finance suggests that price growth will slow over coming months”, and that new lending finance to owner-occupiers has peaked, with first home buyer finance declining since January, and finance to other owner-occupiers plummeting by over 10 per cent in the last two months.  

However, ANZ also stated that it foresees an increase in the Australian Prudential Regulation Authority’s (APRA) serviceability buffer, noting that the combination of high debt-to-income and LVR restrictions looks to be “another likely move”, and that the trend of increasing mortgage fixed rates could “see lending slow enough to obviate the need for further macroprudential measures”. 

In this month alone, Commonwealth Bank of Australia (CBA), Westpac, and ANZ all confirmed increases to their fixed rates. 


Increasing unaffordability tied to wage growth

As highlighted in this ANZ report, one key factor related to its predicted downward trend is the underlying housing unaffordability across the country. 

An analysis published on Friday (19 November) by CoreLogic highlighted just how this has become, noting that while wage growth over the past two decades has reached 81.7 per cent, Australian home values have skyrocketed by 193.1 per cent over the same period. 

In the past 13 months, dwelling values have increased by 22.0 per cent. 

As highlighted by CoreLogic head of research Australia Eliza Owen, the relevance of this is “when house prices accelerate faster than incomes, it is harder to accumulate a housing deposit for a mortgage” as well as creating lower purchasing power to mortgage serviceability over time. 

“The portion of income paid to service housing debt has stayed relatively low and steady over time because of low mortgage rates,” Ms Owen said.

“However, low inflation and wages growth means that households cannot pay down their mortgage as easily or quickly. 

“This is particularly burdensome for relatively new mortgage holders, taking on long loans of 30 years, especially if mortgage rates rise.”

The Reserve Bank of Australia’s current central forecast for the Wage Price Index is that, over 2022, wages will increase by 2.5 per cent and by 3 per cent over 2023.

[Related: RBA governor stays firm on rate freeze in 2022]

House price growth to fall in 2023: ANZ Research

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Sam Nichols

Sam Nichols is a journalist at The Adviser and Mortgage Business. His reporting has featured in a range of outlets including ABC News, SBS' The Feed, and VICE.

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