“The coalition and now the new government would have a greater impact on their policies in the growing market, because these are demand-driven schemes,” he said.
He added that without FOMO (fear of missing out) buyers are more cautious to enter the market, even if this policy has been proposed.
Rising interest rates and falling house prices mean buyers are less likely to enter the market, economists say. Credit:Peter Ray.
AMP Capital chief economist Shane Oliver agreed that the impact would be negligible, given that it will take time for new social and affordable housing to appear on the market.
The Labor government’s agreement to continue funding the coalition’s Housing Guarantee Scheme, which will be 60,000 seats next fiscal year, was still a drop in the ocean.
“The numbers are relatively small, and rising interest rates have already had a significant impact on Sydney and Melbourne,” Oliver said. “That will not be enough to affect the fall in prices.”
AMP has updated its forecasts based on the latest housing price data, saying Australia should expect house prices to fall by 10-15 per cent over the next 18 months, not 2 years.
Economists of Australia’s top four banks believe that raising interest rates will have a greater impact than any new policy introduced by the new government.Credit:Ryan Stewart
Westpac senior economist Matthew Hassan said the new policy would take some time to take effect, which means that their impact, if any, will not be seen for months if not years.
Westpac forecasts falling prices across the country by 2 percent by the end of the year and another 8 percent in 2023, and is not changing its position.
“Affordability and affordability have certainly been a big topic in this election, but the measures that have been put forward do not really change the dial for most people,” Hassan said.
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“Adjusting house prices will eventually alleviate some of these affordability problems … but with rising interest rates, loan servicing is becoming more of a problem.”
ANZ senior economist Felicity Emmett said the forecast, updated last week, that housing prices in the country would fall by 3 per cent by the end of the year and by 8 per cent next year, remains unchanged.
Emmett said economists were already considering a change of government, making an updated forecast last week.
“The Labor government’s policy will obviously help some of the first home buyers to enter the market, but it is relatively limited … These demand-increasing policies tend to raise house prices, but the impact is likely to be relatively small.” she said.
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While the “Buy Help” scheme will help people enter the market, she said it will even take some time to build the money infrastructure before it can begin.
“Raised interest rates will be the biggest challenge for the market, but record low unemployment and the restoration of international borders – these things will help provide some support over the next few years.”
Meanwhile, the NAB has been a little more optimistic about the real estate market this year, assuming prices will rise 2 percent before falling 10 percent next year.
“We are not changing our forecasts at all,” said NAB chief economist Alan Oster. “My long and short is that [the new government] will make no difference.
“Affordability, interest rates and people who worry about interest rates will have an impact,” he said.
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