Home seekers pull back from market sensing imminent rate rises and price falls

Adrian Devine for the Daily telegraph asks if we are seeing buyer hesitation

Home seekers are becoming increasingly hesitant to jump into new purchases because they fear a coming interest rate rise and think prices may drop later this year.

That’s according to the founder of mortgage group Two Red Shoes, Rebecca Jarrett Dalton, who revealed the climate of buyer hesitation has become a key theme for the housing market in 2022.

Ms Jarrett Dalton said this trend appeared to be intensifying as the year progressed and could get even stronger later in the year.

“People are now hesitating when it comes to purchasing a property, which is a big change from the last two years,” she said.

“Interest rate uncertainty and the possibility of property prices falling are the two causes for this hesitation.

“The uncertainty around interest rates is stemming from the varying predictions coming from the big banks as to when rates are going to rise.”

CBA has predicted a rise in June, AMP Capital and Westpac say August, while NAB and ANZ have forecast an increase later in the year.

“With property prices linked to interest rates – as interest rates rise, property prices are predicted to fall, potential homeowners are now starting to hold out and are waiting for the price dip.

“They believe it is coming and they’re now willing to wait. This is especially the case for a lot of first homebuyers, they’re trying to find the balance, or sweet spot, between a low interest rate and affordable property prices.