The Australian Prudential Regulatory Authority’s (APRA) macroprudential tightening in November last year is another factor adding to tighter financial conditions.
Interest rates will be key
The path of interest rates will be critical to developments in the housing sector. Higher inflation and a tightening labour market are likely to push the Reserve Bank of Australia (RBA) to begin lifting the cash rate in the third quarter of 2022.
ANZ Research expects a series of rate hikes to bring the cash rate up to 2 per cent by the end of 2023.