2022 to see slower price growth before 2023 housing price fall: CBA

The CommBank has forecast home price growth will moderate during the first half of 2022, peaking in late 2022 at around 7% higher than at the end of 2021.

Then in 2023 CBA predicts an "orderly correction" of about 10% which will come as CBA economists expect the Reserve Bank of Australia to normalise the cash rate to 1.25% by the third quarter of 2023 from from its current record low of 0.1%.

"The Australian housing market is in the twilight of an incredible boom that has been fuelled by record low mortgage rates," said Gareth Aird, CBA's head of Australian economics.

"The phenomenal lift in prices is not over yet given dwelling prices are still rising briskly in most capital cities.

"But near term indicators of momentum coupled with the recent move higher in fixed rate mortgages suggest that conditions will moderate from here.

"Interest rates become a headwind on property prices if they are rising. That is the place we believe we are moving towards over the next two years given our expectation for the RBA to commence normalising the cash rate in late 2022."

The price growth moderation and fall will follow huge price growth in 2021 with the bank suggesting home prices in Sydney will post a 27% jump and Melbourne a 17% rise in property prices in 2021.

Nationally house prices this year will rise 25%, compared with a 14% for apartments, CBA predicted. 

But in 2023 apartment prices are forecast to decline 7%, less than the expected 10% drop in house prices, it forecast.

Around half of new lending was at fixed rates in October, recent data advised. 

The 10% fall forecast by CBA is higher than ANZ's recent prediction of a 4% drop.