Property expert who predicted huge interest rate rises shares his grim predictions for 2023

A property expert who warned Australians to prepare for a huge spike in interest rates before the Reserve Bank had even acted has revealed his forecast for 2023 – and it’s not pretty.

If Adam Flynn‘s predictions come true it will more pain for families as the worst inflation in 32 years sees the Reserve Bank continue raising interest rates.

By May, monthly mortgage repayments are expected to have jumped by 55 per cent in a year – amounting to an extra $1,261 for those with the average $600,000 loan.

The 42-year-old realtor, who was kicked out of school at 16 before going on to become a self-made millionaire, told FEMAIL housing hardship would only worsen.

‘I don’t believe we have ever seen anything like we are about to see,’ Mr Flynn said.

Property expert Adam Flynn has revealed his grim predictions for 2023 – after being labelled a fearmonger last year 

‘I feel sorry for people who entered the market confident that rates would remain stable. But it didn’t come as a surprise to me.’

His exact prediction, made in January 2022, was that the ‘continuous cheap money and low rates’ had left most Australian home owners overextended. At that time,  the RBA cash rate was still at a record-low of 0.1 per cent with Governor Philip Lowe in 2021 suggesting they would stay on hold until 2024 ‘at the earliest’. 

This was before Russia’s Ukraine invasion led to an inflation spike, with the 32-year high consumer price index of 7.8 per cent now well above the Reserve Bank’s 2 to 3 per cent target. 

Mr Flynn explained most people had ‘over-extended’ on home loans because money had been cheap for too long – only to now have to spend their dwindling savings on mortgage repayments during a cost of living crisis.

At that point, he calculated monthly repayments on a typical $750,000 mortgage would jump by $750 month.

That would relate to a couple with a 20 per cent mortgage deposit paying off a $937,500 house, which would be mid-point price in Canberra.

‘I don’t want to be all doomsday about it but I think there is a bigger issue with serviceability (people’s ability to pay off their loan) than people are putting weight on,’ he said at the time. 

But he underestimated the Reserve Bank which, since May 2022, has increased the cash rate by 3.25 percentage points – the most severe pace of monetary policy tightening since it began publishing a target cash rate in 1990. 

Monthly repayments on a $750,000 mortgage have surged by $1,222 or 42 per cent to $4,105, up from $2,883.

This occurred as a Commonwealth Bank variable rate soared to 5.17 per cent, up from 2.29 per cent. 

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The 42-year-old single father-of-one has a property portfolio worth over $7million and has been in the real estate business since he was 18 

Working couples with a $1million mortgage have seen their repayments climb by $1,630 a month to $5,473 from $3,843. 

He was called a fearmonger, but things actually got much worse than he anticipated.

‘Many mortgage repayments have gone up by $1,875 per month, it’s outrageous,’ he said.

And the pressure will continue, with Mr Flynn predicting borrowers with a $750,000 loan paying an additional $1,500 to $2,000 every month by the end of 2023. 

He warns ‘getting rid of little luxuries’ to keep afloat may no longer be an option. 

‘This isn’t a matter of cutting out the avocado on toast, people will have to move to cheap accommodation and rent their homes out,’ he told FEMAIL.

‘They will have to make a drastic change to make it work or get on the front foot and sell now. Because things are going to get tougher.’ 

Nine-straight Reserve Bank interest rate rises have taken the cash rate to a 10-year high of 3.35 per cent, with Australia’s big banks all expecting another 0.25 percentage point increase on March 7. 

Mr Flynn expects there will be more rises to come.

‘There’s talk of four or five more rate rises to come, it isn’t sustainable, but five or six will be catastrophic, it will hemorrhage the market,’ he said.

The Commonwealth Bank, Australia’s biggest home lender, is expecting two more rate rises in March and April, that would take the cash rate to a new 11-year high of 3.85 per cent days before Easter. 

But Westpac, ANZ and NAB are expecting rate rises in March, April and May that would take it even higher to 4.1 per cent. 

Three more rate rises, starting this month, would see see monthly repayments on a $750,000 mortgage climb by another $354 to $4,459 – marking a 54.7 per cent increase since May 2022. 

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Adam says the rises will trigger ripple effect on the property market, and expects a rush of new homes to be put up for sale

That’s based on a Commonwealth Bank variable rate in coming months rising by 0.75 percentage points to 5.92 per cent. 

Borrowers who took out a fixed rate mortgage in May 2021 – at an ultra-low rate of 1.92 per cent – face being pushed on to a 7.43 per cent ‘revert’ rate.

RateCity calculated this would see repayments surge by 69 per cent because the loan contracts in 2021 said rates would be 3.33 percentage points above the RBA cash rate – now tipped to hit 4.1 per cent by May. 

Adam says the rises will trigger ripple effect on the property market, and expects a rush of new homes to be put up for sale.  

‘Many people bought in the boom when we had extraordinary capital growth,’ he said.

This means people entering the market paid ‘over the odds under the strength of competition’ and under the security of fixed rates.

‘These fixed rates are going to expire by June or July this year, so people need to be on the front foot and work out what they can do to pay their mortgages,’ he said.

‘People will have to think seriously about moving to more affordable accommodation and renting their homes out, and get second jobs to survive.’

Adam believes the ‘floodgates’ will open in July, with homes saturating the market. 

He suggests people put their homes on the market now if they feel like they will have problems keeping up with their mortgage once their fixed rates expire.

‘You need to get in front of everyone else,’ he warned.

July will also mark a good time for new buyers to enter the market – though rates are high he believes this is when they will begin to level out – which means people can borrow against what they can actually afford.

‘They will understand the lay of the land,’ he said. 

‘If you find something that suits now, by all means go for it but bear in mind that by mid-year there will be more to choose from.’

He says while buying sounds crazy, there will be market confidence. Investors will be lining up to snap up deals.

‘People will be able to budget, the consecutive rises from 0 per cent have just been, well shocking isn’t even the right word.

‘It’s something people didn’t allow for based on the advice they were getting from experts at the time.

Adam says the Reserve Bank had a duty of care which they didn’t act on when they advised people rates would stay low before pushing them up month after month.

‘It really isn’t great, people were relying on their advice for the financial security of themselves and their families and for it to have been so wrong is certainly disappointing,’ he said.

‘The level of arrogance is astounding. I believe it has been portrayed with a complete lack empathy for people’s lives.’

Who is Adam Flynn? 

Adam Flynn was kicked out of school, aged 16, before landing a job in real estate when he turned 18.

He now has an impressive $7million property portfolio and has become an expert in the Australian market.

He has been in real estate for 24 years and, until last year, never had any real fears about ‘the property bubble bursting’.

He remained quietly confident about Australia’s property market even during the worldwide instability following the September 11 attacks in 2001 and the Global Financial Crisis in 2007.

The real estate expert, who oversees Coronis Property Management operations across Victoria, describes his job as ‘being on the coal face’.

He saw that people were becoming confident and ‘over-extending’ themselves to get into the property market – based on record-low interest rates.