Housing sentiment is pointing to a decline in turnover throughout the first half of this year, showing a 'clearer' sign the housing market is slowing down, according to Westpac's February 2022 Housing Pulse.

With mortgage rates already rising and a RBA cash rate hike forecast for 2022 , a housing 'correction' is forecast for 2023 and 2024.

Calling the current market the 'calm before the storm', Westpac economists said that the changed rate view - influenced by inflation and labour market challenges - is expected to flow through to all of Australia's property markets. 

Another factor to weigh on property markets is 'deteriorating' affordability, causing buyer sentiment to take a hit, but interest rate considerations have 'yet to really impact'.

Property turnover showed a 'very strong' bounce back from the Delta lockdowns, but hit a 'mild set-back' from the Omicron outbreak late last year.

Nationally, prices have lifted 2.5% since November 2021 - another stepdown from the peak of 7.1% in May 2021 - but annual gains remain 'impressive' at 21.1%. 

The Housing Pulse report shows housing sentiment has been mostly unaffected - except for mild and brief confidence lost around jobs - with the dominant themes continuing to be around high and rising house prices and stretched affordability. 

The 'shock' of a rate rise will impact all markets over the next few years according to Westpac economists.

They said housing become 'hostage' to the economy with prospects resting heavily on how successfully policy makers - particularly the Reserve Bank of Australia - bring Australia through these 'looming' challenges.

Which states are most sensitive to interest rate rises?

Westpac economists said that state trends are showing 'further divergence', with different states falling into three distinct groups - most sensitive, less sensitive, and least sensitive to affordability pressures and higher mortgage rates.

They labelled NSW and Victoria as most sensitive, with lower property turnover, elevated rental vacancy rates in the cities, and lack of immigration weighing heavily.

WA and Tasmania are 'less sensitive', bouyed by slightly better affordability than the more sensitive states, fewer covid impacts, and a 'tight' supply-demand balance with lower vacancy rates.

SA and Queensland are labelled as least sensitive, with plenty of price momentum and a 'super tight' supply-demand ratio, and high turnover.

In Brisbane, dwelling prices increased just under 30% over the past year, with December showing a "rollicking" 8.5% gain.


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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
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Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

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