Home prices in Australia could see major falls by next year, experts have warned.
New research from Deutsche Bank predicted property prices could fall 15 per cent by mid next year.
“If our forecasts prove accurate, the middle of next year will see the weakest house price growth recorded in Australia for more than 50 years,” Deutsche Bank economist Phil O'Donaghoe said.
Also read: RBA hikes rates again: Prepare to pay more
This comes as rising interest rates cool Australia’s red-hot property market.
Monthly home price growth slowed almost everywhere across the country, with widespread falls in June after an outsized interest rate hike, according to the PropTrack Home Price Index.
While prices are down only 0.55 per cent from their peak in March 2022, the June rate hike and expectations of much higher rates later in the year has slowed all markets.
The report found home prices fell 0.25 per cent nationally, with continued falls in Sydney (0.4 per cent) and Melbourne (0.61 per cent).
Prices in Brisbane were down (0.09 per cent) for the first time since April 2020.
More rate hikes on the way
The Reserve Bank of Australia (RBA) hiked rates for the first time in 12 years in May.
This was followed by a whopping 0.5 per cent hike in June.
Economists are projecting the RBA will deliver another supersized hike tomorrow when the board has its July meeting.
Rate hikes have proven to slow the housing market as mortgage holders feel the impact of higher repayments.
In fact, 91 per cent said they believed rates would rise on Tuesday, while another 34 per cent said there would be back-to-back cash rate increases in July and August.
Graham Cooke, head of consumer research at Finder, said this would be a tough pill to swallow for many.
"It's looking almost certain that Australian households will be faced with a triple-whammy of rate rises this year,” Cooke said.
"This will raise the average annual mortgage repayment by over a whopping $5,000 – a huge burden for most families.
"While it's good news for savers, with the average account earning $420 extra in interest over the last few changes, it will be little compensation for mortgage holders.”