ANZ economists have predicted the property market could fall as much as 20 per cent by next year.
Sydney and Melbourne are anticipated to take the brunt of the price falls, with ANZ expecting prices to fall around 14 per cent in Sydney and 11 per cent in Melbourne this year alone.
But it’s not all bad news, with the bank expecting a rebound in 2024.
ANZ said increased mortgage rates would be to blame for falling house prices as potential buyers held off on borrowing.
The Reserve Bank of Australia (RBA) has hiked the official cash rate four times in as many months - increasing from 0.1 per cent to 1.85 per cent since May.
And the consensus is that the RBA will hike again in September.
Mortgage rates soar
Mortgage repayments have skyrocketed in the past few months, with many Aussies feeling the pressure to try to keep up.
For someone with a $500,000 debt at the start of May, with 25 years remaining, the total increase across the four hikes would be $472 a month, according to data from RateCity.com.au.
For the same person with $750,000 left on their loan, repayments have risen around $708 a month since May.
Finally, someone with $1 million still owed, mortgage repayments have risen a combined $944 a month.
“Some borrowers may now be hitting the panic button as the rate hikes start to snowball,” RateCity research director Sally Tindall said.
“Finding an extra $500 a month to cover the mortgage will be a struggle for many families who are already juggling rising grocery and petrol costs.”