National house prices fell for the second month in a row as higher interest rates and unaffordable prices hit housing demand, while rental rates rise at a faster pace than property values. accommodations.
- CoreLogic and Prop Track say national home prices fell in June due to rising interest rates
- CoreLogic says prices fell in Sydney (-1.6pc), Melbourne (-1.1pc) and Hobart (-0.2pc)
- Prop Track found prices fell in Sydney (-0.4pc), Melbourne (-0.6pc), ACT (-0.35pc) and Brisbane (-0.09pc)
Housing data and analytics firm CoreLogic said home values across the country fell 0.6% in June, led by declines in Australia’s biggest cities Sydney (-1.6% ) and Melbourne (-1.1%), but prices also fell in Hobart (-0.2 percent) and Greater Victoria (-0.1 percent).
The Reserve Bank raised official interest rates in May and June to curb soaring inflation, and steeper increases are expected.
Property values rose the most in Adelaide (+1.3%), followed by Darwin (+0.9%), Perth (+0.4%), Canberra (+0.3%) and Brisbane (+ 0.1%).
A competing report from REA Group’s Prop Track found Australian house prices fell again in June, by 0.25%, with the declines led by a 0.4% drop in Sydney and a 0. 6% in Melbourne.
Prop Track said prices in Brisbane fell for the first time since the start of the pandemic – by 0.09% – and values also fell in Canberra, by 0.35%.
He said a “two-speed housing market” was evident, with Hobart (+0.26%) and Adelaide (+0.42%) being the best performing capitals.
Demand for housing has fallen, with the latest lending data from the Australian Bureau of Statistics showing demand for home loans fell 6.4% in April, just before the RBA began raising rates in May, the first rate hike in more than a decade.
CoreLogic research director Tim Lawless said June’s price drop followed May’s interest rate hike, soaring inflation and worried consumers.
“So that’s definitely increasing the level of decline and we’re starting to see more and more cities losing ground in the rate of home value growth, but we’ve also seen a pretty steep reduction in the number of home sales. houses because fewer people are active in the market, and an increase in the number of listings.”
Buyers flee the Melbourne market
Ivan Juricevich, an estate agent in the western suburbs of Melbourne, said the number of buyers and properties on the market had plummeted.
“That means they may have gone down a level in their property searches.
“Investors are always important, but again, they need the numbers to work for them.”
And Mr Juricevich thinks prices in Melbourne will fall further.
“In the next six to 12 months, I think it’s a buyer’s market, definitely.”
CoreLogic said that as housing conditions eased, the real estate market was “tipping back in favor of buyers” with the capital liquidation rate below 60% since late May, longer times to sell and high levels seller discounts.
Small caps keep climbing
It’s a different story in Adelaide, where property prices continue to rise.
Benjamin Cardi recently returned to the South Australian capital and has a massive budget of $1.5million to spend on a family home.
“It remains a seller’s market at the moment,” Cardi said.
Mr Cardi has watched from the highway as property prices in Adelaide have risen by more than a quarter over the past year.
“It’s now reaching the point where it’s about the most we can afford to do what we want.”
However, Mr. Cardi is not overly concerned about rising interest rates.
“With another real estate asset in our portfolio, I’m confident we have some room to manoeuvre.”
Mr Cardi’s buyer’s agent, Katherine Skinner, has never seen the Adelaide market so hot.
“The huge amount of growth is unprecedented here.”
“There are still a lot of buyers who have remained from the extremely hot market and are not necessarily affected by the interest rate hikes.”
Ms Skinner said she saw properties that would have cost $900,000 to sell for $1.5 million without any work done on them.
Real estate prices are expected to fall further
Barrenjoey’s chief economist, Jo Masters, expects house prices to fall by 15% and potentially more in Melbourne and Sydney before starting to stabilize towards the end of next year.
That’s as interest rates rise, with Ms Masters predicting the Reserve Bank will raise the official exchange rate to as much as 2.6% by the start of 2023.
“That’s pretty much what economists call neutral, so that’s where the RBA is trying to achieve.
“And at that level, we think interest payments as a percentage of disposable income will be at levels that have generally slowed household spending.”
She said falling house prices would hit all income brackets and was a major risk to the economy in 2023.
“And that’s why when house prices fall, all income groups are exposed.”
“We would expect a negative wealth effect shock across the income spectrum. And that is a key risk for the future of the economy.”
Prop Track’s Paul Ryan said the “outsized” June rate hike by the RBA and expectations of much higher rates later in the year continued to dampen property markets across the country in June.
“We expect prices to continue falling across the country until uncertainty about the magnitude of interest rate hikes is resolved, likely beyond 2022.”
Rents are rising
CoreLogic said nationwide rents rose 0.9% in June, bringing the annual growth rate to 9.5%.
“Such strong rental conditions throughout the current cycle have largely occurred in the absence of overseas migration, although the reopening of international borders is likely to add further upward pressure on rental demand,” Mr. Lawless said.
“A reduction in average household size during the pandemic helps explain such high rental demand at a time when international borders are closed.”
He said the supply of rental properties had also been affected by a long decline in investment between 2015 and 2021.
Job , updated