Westpac Bank warns of rising interest rates and sharp drop in house prices

Auctioneer Tom Panos has warned estate agents to prepare for the impending drop in house prices – with Australia’s biggest banks forecasting a big meltdown.

Westpac and the Reserve Bank of Australia have both forecast a double-digit drop in house prices, with interest rates expected to rise in the coming months.

Westpac on Friday predicted a 14% drop in house prices in Sydney over the next two years and a 15% drop in Melbourne.

The dramatic developments led Mr Panos to warn estate agents in a social media video that they could find themselves forced out of the profession and back to their old fast food jobs.

Tough love: Auctioneer Tom Panos calls on estate agents to prepare for falling house prices

“KFC managers will leave real estate and return to KFC,” the real estate guru said.

“And you know who’s going to stay behind – professionals, people who know how to negotiate and create urgency, where there’s no urgency.”

Real estate agents tend to rely on commissions when a property they are selling is sold.

Therefore, with housing prices falling, many can expect a hit to their wages.

Westpac expects smaller cities to be less affected over the next two years, with small declines followed by a rapid recovery.

Prices in Perth are expected to fall by 5%, Brisbane to rise by 1% and prices across the country are expected to fall by 11%.

House Price Forecast: 2022-24

SYDNEY 2022 (-3%); 2023 (-9 percent); 2024 (-2%)

MELBOURNE 2022 (-3%); 2023 (-9 percent); 2024 (-3%)

ADELAIDE 2022 (+3%); 2023 (-4 percent); 2024 (+1%)

BRISBANE 2022 (+4%); 2023 (- 4 percent); 2024 (+1%)

PERTH 2022 (flat); 2023 (- 6 percent); 2024 (+1%)

HOBART 2022 (-2%); 2023 (- 6 percent); 2024 (-2%)

AUSTRALIA 2022 (-2%); 2023 (- 8 percent); 2024 (-1%)

Source: Westpac

Meanwhile, Westpac has predicted a 2% cash rate increase by May next year.

Just three weeks ago, the Reserve Bank of Australia issued a similar warning.

The bank predicted that an increase in the cash rate to 2% would cause Australian house prices to fall by 15%.

The RBA is expected to raise the cash rate next week – May 3 – by 0.15 percentage points from a record high of 0.1% after the biggest inflation spurt in 21 years.

Westpac expects smaller cities to be less affected over the next two years, with small declines followed by a rapid recovery.

Westpac expects smaller cities to be less affected over the next two years, with small declines followed by a rapid recovery.

Mr Panos warned estate agents they would go back to working in fast food due to rising house prices

Mr Panos warned estate agents they would go back to working in fast food due to rising house prices

Brace for a DOUBLE-DIGIT drop in property values: Beware, house prices could drop more than $200,000 next year – but this is an incredible opportunity for first-time home buyers

By Stephen Johnson, business journalist

Australian homeowners are being warned to prepare for a 15% plunge in house prices, with major banks now all expecting a rate hike next week and more to follow.

The Reserve Bank of Australia is expected to raise the cash rate on May 3 by 0.15 percentage points from a record high of 0.1% after the biggest surge in inflation in 21 years.

Three of Australia’s big four banks – ANZ, Westpac and NAB – expect the RBA to raise the key rate on Tuesday, marking the first increase since November 2010.

They also expect the cash rate to hit 2% by 2023 for the first time since May 2016, which would cause monthly payments on a typical $600,000 mortgage to rise by $625 in one year.

Three of Australia's big four banks - ANZ, Westpac and NAB - expect the Reserve Bank to raise the cash rate on Tuesday, marking the first increase since November 2010. They also expect the cash rate to hit 2% by 2023 for the first time since May 2016, which would see monthly repayments on a typical $600,000 mortgage rise by $625 in a year (pictured is a Melbourne auction at Glen Iris)

Three of Australia’s big four banks – ANZ, Westpac and NAB – expect the Reserve Bank to raise the cash rate on Tuesday, marking the first increase since November 2010. They also expect the cash rate to hit 2% by 2023 for the first time since May 2016, which would see monthly repayments on a typical $600,000 mortgage rise by $625 in a year (pictured is a Melbourne auction at Glen Iris)

Just three weeks ago, the RBA predicted that a cash rate hike to 2% would cause Australian house prices to fall by 15%.

“Estimates using a housing market model that takes into account historical relationships between interest rates and demand and supply factors suggest that a 200 basis point increase in interest rates from levels would lower real house prices by about 15% over two-years, relative to the baseline model projection in the absence of an interest rate shock,” he said. in an April 8 report.

Nationally, the median house price in Australia jumped 18.2% over the past year to $738,975.

A 15% drop from $110,846 would only bring average prices down to around $628,129, according to data from CoreLogic.

Australian borrowers are being warned to prepare for a 15% fall in property prices, with major banks now all expecting a rate hike next week and more to follow (pictured, Commissioner- Sydney auctioneer Karen Harvey makes an offer for a house in Hurlstone Park)

Australian borrowers are being warned to prepare for a 15% fall in property prices, with major banks now all expecting a rate hike next week and more to follow (pictured, Commissioner- Sydney auctioneer Karen Harvey makes an offer for a house in Hurlstone Park)

The median property price in Sydney soared 20.6% to $1.403 million in the year ending March.

A 15% drop would cause values ​​to drop from $210,473 to $1.192 million – or May 2021 levels.

In Melbourne, median house prices rose at a more moderate annual rate of 11.9%.

A 15% drop would cause values ​​to fall $149,856 – from $999,037 to $849,181 – reaching the lowest levels since May 2017.

In Perth, where values ​​have risen just 7.2% over the year, a 15% or $85,216 drop in property prices – from $568,108 to $482,892 – would send the median level at a June 2009 low, in a market that peaked in 2014 after the last mining boom.


Source link