That’s in the hands of the Reserve Bank of Australia (RBA), which will be taking cues from movements in employment, investment spend, consumer and business confidence and the housing market in the months to come.
Having said that, it is important to provide some perspective on the current situation.
While the RBA target cash rate of 3.35 per cent is significantly higher than the record lows of recent years, it remains well under the record high of 17.5 per cent in 1990.
Unfortunately, it’s been a rude awakening for the most recent generation of property owners, who are now having to abruptly wean themselves off unsustainably low mortgage repayments.
In the short term, it’s going to get worse. Interest rates are set to rise, and property prices have further to fall.
Having said that, once interest rates do stabilise, we can expect the market to consolidate and begin to show signs of recovery – most likely in the second half of the year.
The extraordinary price growth rates experienced during the pandemic period were never going to last, and were always set to experience some form of re-set.
But don’t be fooled by the property doomsayers.
It’s important to remember the dip has come off record highs. Nationally, residential property prices reached their strongest annual growth on record in 2021, rising 23.7 per cent, according to the Australian Bureau of Statistics.
Peaks and troughs are typical of the long-term property market cycle. It is perfectly normal for property prices to come off after a boom period, as the market recalibrates.
But it’s the cake not the icing that counts!
Historical statistics clearly show that once property markets recover, values for the right property always move to a new high.
Good quality property assets will ride out the current market downturn and perform extremely well over the long term, as the wheels of