Prices edge lower as recession weighs on demand

Poor affordability and a weakening economy will weigh on housing market activity this year, causing home sales to remain low over the next few quarters. While house prices increased in February and March, we expect to see further modest declines this year. But this will still leave affordability stretched by historical standards, which means activity and prices will recover only gradually in 2024 as the economic backdrop becomes more supportive. The apartment sector is also part way through a correction. Rents and capital values both declined in the first quarter and we expect an additional 20% drop in values this year and next, taking the peak-to-trough fall close to 25%.