The bank, which is at odds with other forecasts tipping an increase in house prices next year, said across the capitals, house prices had fallen 6 per cent below their peak in March.

“We continue to expect a peak-to-trough decline in prices of 15 to 20 per cent,” the bank said.

It expects the RBA would bring its increases in the cash rate to a halt in May when it hits 3.85 per cent. However, about 62 per cent of the current fixed rate loans were expected to end in mid-2023 and roll over into a higher interest rates and repayment.

“We think that most of the impact on prices will be fully reflected by the end of 2023. In 2024, as policy stabilises and then eases late in the year, we expect to see a modest recovery begin to emerge in house prices and look for gains of around 5 per cent by the end of 2024,” the bank’s economists Felicity Emmett and Adelaide Timbrell said.

“The biggest factor driving down prices is reduced borrowing capacity not a rise in forced sales.

“A tight rental market, rising immigration and low unemployment will all help to mitigate the weakness in housing demand.”

The bank has also forecast housing construction to fall by 10 per cent next year, which was better than its previous forecasts of 15 per cent.

Its predictions for house prices in 2023 was a fall of just over 10 per cent in Brisbane, which is similar to other capitals. Adelaide was the outlier with a fall of 20 per cent.

SQM Research has forecast a recovery in house prices next year, well ahead of the ANZ forecast.

SQM said the capital city increase would be between 3 and 7 per cent.