Melbourne house prices expected to fall by 10 per cent

Melbourne house prices will fall by 10 per cent when interest rates rise, experts say.

The CBA predicts house prices to peak in late 2022, before falling by about 10 per cent in 2023.

The prediction is based on the expectation that the Reserve Bank will lift the cash rate to 1.25 per cent by the third quarter of 2023.

Economist and managing director of Market Economics, Stephen Koukoulas, says the prediction “seems about right”.

He says the fear of a rate hike “might cause people to just hold off a bit”.

“House prices in Melbourne and the rest of the country for that matter have risen by about 20 or 25 per cent in the last 12 months,” he told Ross and Russel.

“Just cool your heels a little bit.”

Press PLAY below to hear what Mr Koukoulas thinks of the prediction