Home price crash ‘accelerates’ as interest rate hikes take their toll
The inevitable decline in house prices is underway and the declines are expected to accelerate in the coming months as rising interest rates take their toll.
CoreLogic’s home value index fell for the second month in a row, after falling 0.6% in June when the central bank raised rates again.
Watch the video above to learn how to get a better deal on your mortgage and credit cards
Watch the latest news on Channel 7 or stream for free on 7plus >>
“Given that inflation is expected to remain stubbornly high for some time and interest rates are expected to rise significantly as a result, it is likely that the rate of decline in home values will continue to grow and decline. become more widespread,” said CoreLogic research director Tim Lawless. Friday.
The national decline in home values was driven by sharp monthly declines in Sydney (down 1.6%) and Melbourne (down 1.1%)
But Adelaide is defying the downward trend in other capitals and regions, with house values rising by 1.3%.
Since the central bank began raising the policy rate in May for the first time in years, most housing markets across the country have seen steep reductions in the rate of growth in home values.
The latest hike in June took the cash rate to 0.85%, prompting many banks to raise rates on their variable and fixed mortgage products.
“Property prices have started their descent,” said Gareth Aird, head of Australian economics at Commonwealth Bank.
In May, the CoreLogic home value index fell for the first time since September 2020, led by declines in Sydney, Melbourne and Australia’s second most expensive property market, Canberra.
Still, the national home value index rose 11.2% in the year ended June 30.
Since values peaked in May 2021, consumer confidence has deteriorated, reaching its lowest level since April 2020 and the early stages of the COVID-19 pandemic.
“The Reserve Bank’s cash rate increases in May and June ended an era of home loan interest rates below 2%, something we may never see again,” Steve said. Mickenbecker, from the financial comparison site Canstar.
The housing boom had already pushed housing affordability to extreme levels, but would-be buyers now face high inflation and a higher cost of debt, translating into lower housing demand.