But he cautioned it could re-accelerate if the Reserve Bank continued to lift rates aggressively.
“It’s possible we have seen the initial shock of a rapid rise in interest rates pass through the market and most borrowers and prospective home buyers have now ‘priced in’ further rate hikes,” he said.
“However, if interest rates continue to rise as rapidly as they have since May, we could see the rate of decline in housing values accelerate once again.”
Despite the fall in values, all markets are still ahead of their pandemic-period lows. Sydney values rose 27 per cent through the pandemic, while Melbourne’s rose 17.3 per cent. The hottest market was Adelaide, where values rose 44.7 per cent through the pandemic and had since fallen 0.3 per cent.
Financial markets put the chance of a half percentage point increase in the official cash rate at the RBA’s Tuesday meeting at four-in-five. The same markets expect the cash rate, currently 2.35 per cent, to be above 4 per cent by the middle of next year.
But the turmoil in global financial markets, most recently highlighted by the surge in the price of British government debt after the Truss government’s poorly received mini-budget, has some economists believing the RBA may lift rates by a quarter percentage point and then wait to see how the economy responds.
Treasurer Jim Chalmers on Sunday said the economic situation globally was becoming tougher.
“The global environment is a dangerous and difficult place right now. Even in the last month or two, the global situation has deteriorated dramatically in many of the major economies that we monitor most closely, the chance of a recession has edged over from possible to probable,” he said.
But figures from the Industry, Science and Resources Department released on Monday suggest a key part of the Australian economy is likely to remain extremely strong through the current financial year and continue pumping money into the country.
The department expects resource and energy exports to reach a record $450 billion this year, a $28 billion rise on last financial year.
Exports of iron ore are expected to edge down from $134 billion to $119 billion this year. Thermal coal, which has surged in price, is expected to be worth $62 billion this year after $46 billion in 2021-22, but metallurgical coal exports are forecast to slip to $58 billion from $66 billion.
The department said LNG exports were tipped to hit $90 billion from $70 billion due to the rise in global prices.
Minerals tied to the growing renewable energy and battery markets are now rising strongly in value.
Exports of copper, nickel and lithium are expected to be worth $33 billion this year, double what they were worth in 2020-21.
“Lithium export earnings are forecast to increase by more than tenfold in just two years from $1.1 billion in 2020–21 to almost $14 billion in 2022-23 before easing to around $13 billion in 2023-24,” it said.
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