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Home prices in Australia are declining and the Reserve Bank of Australia (RBA) continues to raise cash rates, so housing professionals expect to see an even more significant downtrend in the coming months.
CoreLogic Home Value Index Following the second RBA cash rate hike in 2022, it fell 0.6% in June for the second straight month. The June quarter index also fell 0.2%.
“Given that inflation remains stubbornly high for some time and interest rates are expected to rise significantly accordingly, the rate of decline in home prices is likely to continue to gain momentum and become more widespread,” Core said. Logic’s research director, Tim Lawless, said. ..
The fall in home prices across the country is due to significant monthly declines in home prices in two major Australian housing markets: Sydney (down 1.6%) and Melbourne (down 1.1%).
However, Adelaide stood out in the capital as home prices rose 1.3%.
Throughout June, Australian rural home prices remained high, but overall growth fell to just 0.1%.
Australian home prices fall following RBA cash rate hikes
It’s worth noting that most home markets across Australia have recorded a sharp drop in home prices since the RBA began raising cash rates in May.
With the cash rate rising to 0.85% in June, many Australian banks have rapidly raised floating and fixed rates on mortgage products.
“May and June reserve bank cash rate hikes have come to an end when mortgage rates fall below 2%. This may never be seen again,” said the financial comparison website. Steve Mickenbecker of Canstar said.
In the latest development, Australia’s largest bank, the Commonwealth Bank of Australia, suddenly raised fixed rates for homeowners and investors by 1.4% on June 30th. Other banks are also expected to follow suit in the coming days.
“House prices have begun to fall,” said Gareth Aird, head of the Australian Economics Division at the Commonwealth Bank of Australia.
In May, CoreLogic’s Home Price Index recorded its first decline since September 2020, due to falling home prices in Australia’s second most expensive real estate market, Sydney, Melbourne and Canberra.
Nevertheless, the National Home Value Index increased 11.2 percent in the 12 months to June 30.
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Alfred Bui is a Melbourne-based Australian reporter with a focus on local and business news. He is a former small business owner and holds two master’s degrees in business and business law. Contact him at [email protected].
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