The housing market downturn in the biggest cities is coming to an end, according to economists predicting a spike in house prices as soon as July.
Macquarie Bank’s equities strategy team says data has previously shown a huge bounce-back after a peak decline in property prices, with history expected to repeat itself soon.
“House price growth reached its worst on an annualised basis in January. Prices have continued to fall since then, but the rate of decline has slowed,” the bank wrote in a statement. “If you look at prior cycles, an increase in house prices occurred five to seven months after the trough in the annualised growth rate. Using the average of six months, prices could rise by July.”
Macquarie’s prediction is also attributed to interest rate cuts, relaxed lending conditions and the recent election result.
AMP Capital chief economist Shane Oliver has similar sentiments. “The combination of the removal of the threat to property tax concessions, interest rate cuts, financial help for first-home buyers and APRA relaxing its 7% interest rate test, points to house prices bottoming earlier and higher than we have been expecting,” he says.