One of Australia’s biggest finance experts has made three key predictions for interest rates and the housing market including a further 10 per cent fall in property prices.

Christopher Joye, co-founder of $7billion fund manager Coolabah Capital, accurately forecasted the Covid boom and subsequent fall in property prices.

But now he warns a string of interest hikes is still to come which will spark an economic crisis – and send house prices further downwards.

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Christopher Joye (pictured), who is the co-founder of Coolabah Capital, made three predictions about interest rate hikes and the fall in property prices

After nine consecutive hikes in interest rates, Mr Joye believes the Reserve Bank will hike rates three more times ‘before they pause and paddle’, he told The Barefoot Investor, Scott Pape.

Mr Joye says those interest rate rises will then have a significant effect on the economy which will be ‘widespread and painful’.

And for his third warning, he says that will trigger a fall in property prices of at least another 5 per cent to 10 per cent.

The latter prediction is in line with a previous forecast Coolabah Capital founder made.

‘Across the five capital cities, index prices are down 10 per cent right now, and they’re falling at more than 1 per cent a month. So we are one month away from the biggest losses on record in 40 years,’ he told Mr Pape.

Mr Joye claimed in October 2021 that property prices would drop between 15 to 25 per cent due to rate hikes from the central bank.

The pair were also critical of the Reserve Bank, with Pape saying the central bank had failed to ‘keep inflation from rising out of control’.

It comes as Aussie Home Loans founder John Symond predicts that house prices wouldn’t start rising again until 2024 – as he too blasted the RBA.

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Mr Joye claimed that property prices would fall another five to 10 per cent due to rate hikes (pictured, houses in Sydney)

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Mr Joye spoke with fellow finance manager Scott Pape (pictured), who is better known as the Barefoot Investor

Mr Symond, who founded Aussie in 1992, said the RBA would be forced to cut rates in 2024 to ward off a steep economic downturn, and that would cause house prices to rise again like they did in 2021 and early 2022.

‘I’m confident that this time next year, house prices will be stronger than they are now,’ he told Daily Mail Australia.

Mr Symond said the lead-up to rate cuts at the end of 2024 would be a signal to buyers to get back into the market.

‘Once they start coming off again, which probably will be towards the end of next year, mid to the end of next year and you see rates edging down by half a per cent, that will be a signal to home owners “we’ve got to have a hard look at this”,’ he said.

The Commonwealth Bank is expecting the RBA to cut rates by 0.5 percentage points in the December quarter of 2023, followed by two more rate cuts by the end of June 2024.

Mr Symond did not expect such a rapid reversal, and thought rate declines would not occur until late 2024 when the current rate squeeze would have caused a sharp drop in consumer spending, going close to triggering a recession.

‘If they continue going up over the next six months, they are taking that risk,’ he said.

‘I disagree with the governor when he said that interest rate rises aren’t felt straight away – Australia unlike Europe and the US, we’re a very, very, very housing-centric country and as soon as there’s an interest rate rise, it’s felt immediately.’

Just as rate rises hit Sydney and Melbourne first, Mr Symond said future rate reductions would also prompt a rapid re-investment in housing, with consequent price increases.

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Aussie Home Loans founder John Symond (pictured right with wife Amber) predicts house prices will recover again in 2024 when the Reserve Bank is forced to cut interest rates

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Mr Symond was scathing of Reserve Bank of Australia Governor Philip Lowe (pictured) for promising in 2021 rates would stay on hold until 2024 only to have since raised them nine times

Mr Symond predicted that when rates were cut in 2024, bank variable rates would drop by less than the RBA cash rate easing – as occurred in late 2008 during the Global Financial Crisis.

‘Interest rates, when they start dropping, you might find some of the banks might not drop the whole Reserve Bank amount,’ he said.

That’s because the banks and non-bank lenders source about 40 per cent of their funding from global money markets instead of from the Reserve Bank of Australia.

The banks’ global borrowing costs could mean they will likely be stingy in passing on the full rate reductions to mortgage holders.

But he said the banks would be unlikely to raise variable rates through 2023 in excess of RBA moves, regardless of what their borrowing costs might be.

‘In this environment when interest rates have gone up so sharply, in such a short period of time, the banks would not be game enough – they’d get slaughtered by both the media and customers,’ Mr Symond said.

When it came to the performance of the Reserve Bank, Mr Symond was scathing of Dr Lowe for promising in 2021 rates would stay on hold until 2024 only to have since raised them nine times.

‘The guy obviously knows his stuff but in this particular aspect of his job, it’s very unfortunate that this aspect is a very, very big and sensitive area of his role, he got it so wrong,’ he said.

‘On that, you’d have to mark him as a fail.’

Source: daily mail

The post Finance expert makes three home market predictions. appeared first on Amora Escapes.

Lower interest rates in 2023 could revitalize Canada’s housing market before the end of the year, according to some economists, even as the central bank warns the rate cut conversation is premature.

A report from Desjardins Economics released Thursday expects home sales in Canada to “reach a low in the second half of 2023 before lifting off again.”

Some provinces such as Ontario and British Columbia should see a return to higher prices next year as a result, the report argues, putting a “brake” on any improved housing affordability.

The revised market outlook points to a possible drop in the Bank of Canada’s benchmark interest rate as driving the housing sector’s resurgence, as well as strong demand from immigration and higher purchasing power from robust household savings and a tight labour market.

The Bank of Canada signalled last month it would pause further changes to its policy rate while it lets its aggressive rate hikes from the past year take effect.

The central bank’s own surveys released earlier this week show some market watchers are expecting rate cuts before the end of the year.

Governor Tiff Macklem pushed back on the idea after a speech in Quebec City on Tuesday, telling journalists: “It’s really far too early to be thinking about cutting rates.”

“We are pausing interest rate hikes to assess whether we’ve raised interest rates enough to get inflation all the way back to target,” he said Tuesday. “The question is really whether we’ve done enough. It’s not about whether we’re considering cutting interest rates.”

But Macklem also conceded that the pause in rate hikes might have a stimulating effect on the sector, as buyers and sellers who have been on the sidelines waiting for the peak of rates seize the temporary sense of clarity.

“The fact that we’ve paused may bring people back into the market. These are things we’re going to have to watch,” he said.

:02Housing market was ‘unsustainably hot’ during pandemic, but is now a ‘vulnerability’: Macklem

Randall Bartlett, Desjardins’ senior director of Canadian economics and one of the report’s authors, tells Global News that the expected pause in rate hikes is already driving down some mortgage rates, opening the door for some prospective buyers.

When markets anticipate future cuts, that drives down longer-term bond yields, he explained in an email, which feeds into fixed-rate mortgage products.

Desjardins expects five-year fixed-rate mortgages on offer to continue to drop as the Bank of Canada maintains its key rate, with variable-rate products following suit if and when cuts eventually begin.

“Falling borrowing costs should be a major driver of the (housing market) rebound,” the Desjardins report says.

How much further does the housing correction have to go?
The Desjardins report notes the housing correction has already been pronounced: existing home sales are down 38 per cent from the peak roughly a year ago, with the average sale price down 20 per cent from the market’s latest highs.

There’s still further to go, the report’s authors argue, as high interest rates will “continue to weigh on housing market activity.”

“As such, there is likely more pain ahead for Canadians, including a recession in 2023,” the report states.

For the Bank of Canada’s part, it said in a revised outlook last month that the housing market is expected to continue cooling through to mid-2023 before rebounding slightly.

0:33Drop in home sales expected this year

Royal Bank of Canada’s assistant chief economist Robert Hogue, meanwhile, said in a note Tuesday that Canada’s housing correction appears to be “broadly easing.”

He said he expects the housing market to bottom out around the spring or summer, with the timing varying from market to market.

“The recovery that will follow, however, is poised to be very gradual at first,” he wrote. “We expect the massive increase in interest rates will continue to hold back activity and compress purchasing budgets for some time.”

What could housing look like across Canada this year?
The Desjardins report also expects the housing correction and subsequent rebound will vary by province.

The report puts Ontario and B.C. in similar boats, classified as the “most vulnerable” to further corrections in their housing markets in 2023.

Ontario, for instance, is expected to finish 2023 with home prices down 25 per cent from their peak, with housing activity returning to pre-pandemic levels by the end of next year.

But the two provinces’ reputations as attractive hubs for immigration will “underpin” the recovery for their respective sectors, the report argues.

Quebec is meanwhile expected to see a further 20 per cent decline in home sales before hitting a 10-year low, the report projects, before starting a gradual climb back up in 2024.

While Desjardins’ economists remark that the Maritime housing markets have shown some resiliency in the correction with little price decline through 2022, there might be early signs of a downturn heading as the pandemic-related migration boom starts to wane.

Strong commodity activity and prices are expected to boost economic output in the Prairie provinces, per the report, and the housing market should get a lift accordingly.

The relative affordability of Calgary, Edmonton and Winnipeg will make each city an attractive destination for immigration as well, Desjardins’ economists argue.

Source: global news

The post Here’s how interest rates could effect Canada’s housing market in 2023 – National appeared first on Amora Escapes.