Property prices to cruise in 2022, decrease in 2023: Westpac

author-avatar By
on October 14, 2021
Property prices to cruise in 2022, decrease in 2023: Westpac

Westpac has adjusted its outlook for Australian property prices in the coming years, predicting 2023 will see a small correction as interest rates rise.

Westpac's latest outlook predicted property prices will rise 8% in 2022, before falling 5% in 2023. 

"Markets continue to show very strong momentum with only a slight dampening effect from the latest COVID lockdowns," Westpac economists Bill Evans and Matthew Hassan said. 

"We now expect a 22% gain for the full 2021 calendar year (up from the previous forecast of 18%)."

The 8% forecast growth figure for 2022 was revised up from Westpac's previous prediction of 5%, with the report noting most of the increase will be loaded into the first half of the year. 

According to Westpac, markets will move into the first year of a correction phase in 2023 as official interest rates rise, with prices forecast to retrace by 5%.

Westpac, CBA, ANZ all predicting more serviceability tightening

The Westpac report reinforces statements made in September by CBA and ANZ that lending restrictions are on the way.

The banks' predictions were confirmed earlier this month, with APRA recommending an increased minimum interest rate buffer for banks to use when assessing home loan serviceability.

The serviceability increase is estimated to reduce the borrowing power of property buyers by around 5%. 

Westpac reports further macro-prudential policies and an increase in interest rates would start to influence property prices in 2023.

"Last week’s move by APRA – lifting the buffer rate applied to loan serviceability assessments from 2.5% to 3% – marks the first step in what we expect to be an incremental tightening in ‘macro-prudential’ policy (MPP) aimed at restraining credit growth and housing market activity," Westpac said. 

"The shift on MPP has come a little earlier than expected – before the full scale of the ‘delta’ shock has been confirmed and ahead of reopening, signalling a degree of urgency."

Property prices 2021-22

Westpac outlined lockdown reopening boosts will more than offset any initial drags from recently announced macro-prudential measures, generating updated predictions of 22% price growth for 2021 and 8% price growth for 2022. 

"A further 3% gain over the last two months of the year is likely, bringing the cumulative rise to 22% for the full year," the report said. 

"This strong momentum will carry into 2022.

"However, the pace of gains is expected to slow, levelling out over the course of next year before moving into a correction phase in 2023."

Affordability concerns 

The report also raised affordability concerns for capital cities, and the regions. 

"The Sydney and Melbourne markets are, respectively, 18% and 10% above their previous price peaks in 2017-18, a time when both encountered major affordability problems," the report said. 

"Many other capital city and regional markets are also recording high prices by historical standards."


Advertisement

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

(

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
NO UPFRONT OR ONGOING FEES

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
NO UPFRONT OR ONGOING FEES

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees

Rates correct as of November 27, 2021. View disclaimer.



Image by David Boyle via Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

Latest Articles

author-avatar
Aaron joined Savings.com.au in 2021. He is a finance journalist with a keen interest in property, the share market, and improving financial literacy in young Australians.

Be Savings smart.
Subscribe for free money newsletters.

By subscribing you agree to the Savings Privacy Policy