House Queensland
Family-suitable houses in Queensland, Victoria and New South Wales expected to see most price growth. Image – Canva
  • RBA unlikely to increase cash rate, or will do so gradually
  • Out-of-pocket costs, including mortgage repayments, very low
  • Buyers won't see price reductions, with a steady increase predicted

The latest home value statistics showed the growth rate of housing values is losing momentum, but the co-founder of BuyersBuyers, Pete Wargent, warns buyers not to hold their breath waiting for price reductions.

Interest rates unlikely to increase

According to Mr Wargent, asking rents are on the rise with an approximate 10% annual increase and low mortgage rates continue to attract investors.

As a result, the market remains strong and areas such as Sydney and Melbourne will see increased activity as the cities emerge from lockdown.

“Recently there have been some calls for the Reserve Bank to increase the cash rate sooner than previously expected, markets looking for a potential increase of up to 1 per cent in 2022, but even in that scenario mortgage repayments would remain comfortable.”

Pete Wargent, co-founder of BuyersBuyers

CEO of RiskWise Property Research Don Peleg said he does not expect the cash rate to increase in 2022, stating that the RBA has outlined various conditions that need to be met for this to occur.

“Primarily, the inflation rate should be sustained (i.e. over a few quarters) within the 2 to 3 per cent range, which is the bank’s target,” Mr Peleg added.

Mr Peleg explained that commodity prices and supply-chain issues are large factors in the current inflation, but are global factors that will likely alleviate given time.

He also predicts employment conditions and wage growth will be improved over the next year, however he believes an increase in immigration will ease the pressure on wage growth.

“Combined with elevated under-employment and underutilisation, this means it’s unlikely that wages growth and employment measures will show a consistent improvement so quickly,” Mr Peleg said.

For this reason, Mr Peleg expects any increase in cash rates to be gradual to allow for assessment of its impact on the market.

Demand strong, upfront costs low

Mr Wargent said incomes in New South Wales are increasing, particularly for professional roles due to a skills shortage, and hence giving buyers increased buying power.

Strong lending figures and auction clearance rates also point to a thriving market with high demand, which Mr Wargent expects to continue once immigration expands.

Although demand is high, out-of-pocket costs remain low and buyers are entering the market for little in upfront payment.

Mortgage interest repayments remain low, prompting record numbers of buyers to enter into fixed-rate terms last quarter.

“But context is important, and the share of household income expended on interest repayments is tracking close to as low as we’ve seen over the past four decades.”

Pete Wargent, Co-founder of BuyersBuyers

“Even 100 basis points of interest rate increases from here can be absorbed by the market, as interest rates (and consequently monthly repayments) will still remain favourable in comparison to historical averages,” said Mr Wargent.

Mr Wargent explained that this possible movement in interest repayments would impact the top of the market most, but even so demand would likely remain strong.

Household finances RBA
Source: RBA

“At the coal face, we are seeing many more auctions and listings come online now in Sydney and Melbourne, which is a healthier dynamic for the market and will naturally cool the rate of price growth.

“But overall, activity is still very buoyant, and we definitely expect to see prices higher than today by the end of 2023,” Mr Wargent said.

Housing values will continue rising steadier

Mr Peleg said the most recent forecasts by RiskWise expect dwelling prices to rise between 5% and 8% in the next year continuing into 2023, disappointing those waiting for price reductions.

“Houses and other family-suitable properties – particularly in the more affordable areas in New South Wales, Victoria, and south-east Queensland – are expected to be at the higher end of that range. However, properties at the top-end of the market are likely to deliver slower capital growth,” he said.


Mr Wargent is in agreeance that a price reduction is not on the cards, labeling talk of price declines due to rapidly increasing interest rates “overdone”.

“We expect 2022 to be a very busy year for housing market transactions, especially for investors,” he added.

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