the worst is yet to come

“The chances of a sustained recession and giant price drops seem to be steadily dissipating.”

Inflation ‘recedes’

Ms Conisbee said there had been a noticeable decline in gasoline prices and supply chains seemed to be moving a little faster in the last seven weeks.

“Crude oil prices have fallen from a high of nearly $120 a barrel to around $90, a drop of 25 percent. The Baltic Dry Index, which measures the cost of shipping around the world, is down nearly 80 percent,” he said.

“Given the importance of fuel and supply chains to our high inflation, this gives us an idea of ​​how our high inflation may end sooner rather than later. With inflation beginning to recede, so does the need to raise interest rates.”

But AMP Chief Economist Shane Oliver said the recent spike in settlement rates was not an indication of market stabilization.

“There were rebounds in sales in the 2011 and 2017-19 property down cycles that did not mean imminent increases,” said Dr. Oliver.

“I suspect the rebound in recent weeks reflects the mix of bargain hunters and sellers lowering their prices as lower volumes occurred and interest rates continue to rise.

“I continue to see average house prices fall 15-20% top to bottom, with the bottom most likely in the second half of next year after the RBA stops rising and starts cutting rates , which is not expected until the second half of next year.”

While auction settlement rates have risen in recent weeks, they were still below the benchmark where prices could rise again, said Nicola Powell, head of research and economics at Domain.

“I think talking about the bottom of the market is a bit optimistic,” Dr. Powell said. “Yes, we have seen settlement rates stabilize in recent weeks, but they are still below 60 percent, which is a level that indicates price inflation. At the current level of 58 percent, it indicates that prices will continue to decline.”

ANZ Senior Research Economist Felicity Emmett said despite some encouraging signs, the worst of the recession was far from over.

“I think it is very premature to say that the housing market has bottomed out when many of the market participants would hardly have felt the impact of rate increases,” said Ms. Emmett.

“It takes a little while for the rate increase to trickle down to mortgage payments. The May rate increase likely didn’t result in higher mortgage payments until late June or July.

“As more rate increases are expected, it’s really hard to see property prices bottoming out until at least cash rates have stabilized.”

ANZ expects interest rates to peak later this year at 3.35 percent, which will reduce borrowing capacity by 30 percent.

“That will really limit the amount that people can bring to auction or private sale,” Emmett said. “I don’t think there’s any way to escape that, which is why we think the recession has a lot more time to last.”

ANZ forecasts house prices in Sydney to fall 20 per cent from peak to trough, Melbourne, Adelaide and Hobart 17 per cent each, Brisbane, Perth and Darwin 12 per cent each, and 17 per cent to Nacional level.

SQM Research managing director Louis Christopher said the property market could bottom sooner if the RBA halted interest rate increases.

“I think we are approaching a pause in rates where the RBA just sits on their hands for a few months to see what the data looks like, and it has a lot to do with inflation,” Christopher said.

“So it is very possible that the market bottoms sooner and even recovers only with a pause in interest rate hikes. If we saw a pause in the RBA at the next meeting or in October, that could improve sentiment and stimulate the housing market.”

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