Australia's biggest home lender is expecting property prices to fall by 12 per cent soon after official interest rates go up again.
The Commonwealth Bank is forecasting double-digit plunges in Sydney, Melbourne and Canberra in 2023, following strong gains since the end of 2020.
Philip Lowe, the Governor of the Reserve Bank of Australia, is now indicating the cash rate will be raised from a record low of 0.1 per cent in 2023 instead of 2024 as previously promised.
But the Commonwealth Bank's head of Australian economics Gareth Aird is predicting interest rates will now be raised in November 2022, marking the first cash rate increase in 12 years.
Property prices across much of Australia are expected to continue to rise before plummeting in 2023 (pictured, a house for sale in Melbourne's Carlton North)
Australia's biggest home lender is expecting property prices to fall by 12 per cent soon after official interest rates go up again (pictured is auctioneer Jesse Davidson at Strathfield in Sydney's inner west)
'The Australian housing market is in the twilight of an incredible boom that has been fuelled by record low mortgage rates,' he said.
Mr Aird is now predicting the Reserve Bank will raise the cash rate to 1.25 per cent by the September 2023, a level unseen since mid-2019, which 'lies at the heart of our expectation that home prices will contract'.
Should that prediction materialise, the RBA would be raising rates five times, on each occasion by 0.25 percentage points judging by previous moves.
The Commonwealth Bank is expecting Sydney property prices to climb by 27 per cent in 2021, before slowing to 6 per cent in 2022 and plunging by 12 per cent in 2023.
In the year to October, Sydney's median house price surged by 30.4 per cent to an even more unaffordable $1.334million, CoreLogic data showed.CBA forecast Melbourne prices rising by 17 per cent this year, before growing by a more subdued 8 per cent in 2022 and diving by 10 per cent in 2023.
Melbourne's mid-point house price has grown by an annual pace of 19.5 per cent to $972,659 as Canberra's equivalent value rose by 29 per cent to $985,040.
Canberra was also tipped to see double-digit falls, following a 26 per cent rise in 2021, a 7 per cent gain in 2022 before a 10 per cent plunge in 2023.
Australia wide, property prices were tipped to grow by 22 per cent in 2021, 7 per cent in 2022 before plummeting by 10 per cent in 2023.
In October, house
