peak mountain
Property prices may reach the peak sooner than expected. Image – Canva.
  • 39% expect the NSW property peak to occur in the final quarter of 2021
  • 32%, however, think this won't occur until 2022 or beyond
  • If prices peak, this could benefit first home buyers, experts say

The majority of property experts believe NSW house prices will hit a peak this year, according to a survey conducted by Finder.

All the experts surveyed believed the cash rate would remain on hold today (it did) and 68% predicted that property prices in New South Wales would peak sometime this year.

Additionally, almost two in five (39%) expected this peak to occur in the final quarter of the calendar year, nearly a third believed this could happen even sooner – within the next three months.

Almost one-third (32%), however, think the peak won’t occur until 2022 or beyond.

The news comes after Australian Bureau of Statistics (ABS) data revealed that Australians borrowed $75 billion in the first four months of 2021 for housing. By contrast, the same timeframe in 2020 saw $48 billion borrowed.

Finder’s head of consumer research, Graham Cooke, said the rising property prices led to the unprecedented level of borrowing.

“Aussies borrowed $27 billion more for housing from January to April this year compared to last – and last year was a record,” said Mr Cooke.

“Many feel that these increases can’t keep going indefinitely and our panel tends to agree. Expect the current rise in prices and activity to peter out by 2022.

“For first-time buyers, this means that the bottom rung of the housing ladder should stop becoming steeper within the next 6 months.”

Graham Cooke, Finder head of consumer research

Unaffordability concerns on the rise

It is clear many believe housing is becoming unaffordable for the average person – a survey found that as many as nine in ten Australians felt this way.

The overwhelming majority of experts surveyed agreed with this sentiment (78%), with Some blaming record low-interest rates and wage growth for the level of unaffordability.

Economic Sentiment, July 2021

Economic Sentiment
Source: Finder RBA Cash Rate Survey

Griffith University’s Tony Makin believed a real estate bubble is occurring due to the low rates, with AMP’s Shane Oliver stating that unaffordability had been an issue for 25 years.

“For the average Australian first home buyer, housing affordability has been deteriorating since the mid-1990s,” Mr Oliver said.

Despite this, Mr Cooke believed that next year may be better for affordable housing compared to this.

“Positivity around housing affordability is still low, but if expert predictions of prices peaking later this year are true, 2022 could prove a much better year for housing affordability,” said Mr Cooke.

“Anyone saving for a deposit now could start to target a purchase next year.”

In a move to overhaul property tax, the New South Wales government is introducing a $25,000 grant to help first home buyers enter the market.

Despite the good intention, over half (55%) of experts believed the grant should not be introduced in other states with fears this would stoke property prices even more.

“We constantly hear that property is overpriced and that first home buyers struggle to enter into it. Encouraging more demand from first home buyers only perpetuates this snowball,” said Dale Gillham of Wealth Within.

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