Property prices set to slump as much as 13%, says HSBC chief economist | The Business | ABC NEWS

HSBC chief economist Paul Bloxham says the downturn could see house prices fall 13 per cent from a peak to trough.

“We’re already down about 6 (per cent), a little bit more if you look at the daily measure, so we’re almost halfway through the house price decline that we’re expecting. We think house prices will decline for the next couple of quarters,” he said.

“The thing that’s going to have to happen before house prices start to stabilise and then finally turn around is that interest rates have to start coming down, or at least there has to be some expectation that interest rates are going to come down soon,” he said.

Paul Bloxham’s comments come as the latest housing data from Domain reveals capital city values are down 4.7 per cent in the three months to September, the steepest quarterly drop on record.

For the first time in 15 years, all eight capital cities fell simultaneously, according to Domain.

The sharpest fall was in Perth, followed by Brisbane, ending the multi-speed housing market. Expensive homes dropped the most, while cheaper properties were relatively stable.

It follows a warning from the RBA’s deputy governor, Andrew Hauser, of more rate pain ahead. Markets are now putting the chance of a Melbourne Cup interest rate rise at more than 50 per cent.

Mr Bloxham says it’s HSBC’s central case that the RBA will hike rates at its next meeting.

“Next week we’re going to get the third quarter inflation print that proves to still be very high, higher than the RBA will be comfortable with on the core measures that they focus on,” he said.
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