Unlike the last global recession of 2008, Australia’s real estate sector is expected to take a larger hit, while the US will emerge largely unscathed.
That’s according to the latest report released by Goldman Sachs earlier this month, called ‘The housing downturn: A bigger deal down under and up north’.
The bank’s research concluded that Australian properties will plunge by a whopping 18 per cent after the bubble bursts, if the report is right. New Zealand came out worst in the report, with its property values to drop by 21 per cent. Canada would plummet 13 per cent.
It comes as property data already indicates the housing market is on the decline in Australia after five consecutive months of interest rate increases by the reserve bank.
Some countries won’t be nearly as impacted including France, the nation’s property average will dip by just six per cent by the end of 2023. In the UK it’s even better news as their property market is expected to remain stable.
And in the US, properties are actually going to go up slightly, by 1.8 per cent.
In 2021, the Australian property market was turbocharged, with house prices rising nationally by 25 per cent in a year.
At its peak, the cumulative value of all of Australia’s property surpassed $9 trillion.
The US and UK, in comparison, never experienced as big of a boom, and so accordingly won’t tumble by as much either.
These predictions by Goldman Sachs are largely in line with what Australian banks have forecast for the coming year. At the end of last month, Westpac warned Aussies about an 18 per cent drop in Melbourne and Sydney by the end of next year. However, the rest of the country there was likely to be a much smaller drop, of around eight per cent on average.
The week before, ANZ also released a similar forecast, with capital city prices tipped to drop by 18 per cent for the end of next year before climbing by five per cent in late 2024.
As cost of living increases and interest rates rise, there are already early signs that the property sector is caught up in a market slowdown.
If you need assistance with rising interest rates and increasing hardship, please reach out to our team and we can help you to navigate the difficult times ahead.
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