Australia home prices fall further as rate hikes weigh on market

AUSTRALIA’S housing market declined further in January, resulting in the median price in Sydney dropping below A$1 million (S$924,010) for the first time in almost three years.  

CoreLogic’s national Home Value Index dropped 1 per cent, with every major city recording a fall, data showed on Tuesday (Jan 31). Prices in bellwether market Sydney slid 1.2 per cent, while Melbourne and Brisbane fell 1.1 per cent and 1.4 per cent, respectively. 

The national index is now down 8.9 per cent from its April 2022 peak, the largest and fastest fall in values since at least 1980, CoreLogic said. That’s tracked the Reserve Bank’s most aggressive tightening cycle in 33 years as it raised interest rates 3 percentage points between May and December to cool inflation.

Tim Lawless, research director at CoreLogic, highlighted that house prices soared more than 28 per cent during the record-low rate era of Covid. As a result, “despite the recent sharp drop in values, every capital city and rest of state region is still recording home values above pre pandemic levels,” he said.

But Lawless only expects house prices to stabilise once rates have peaked.

“Until Australians have a higher level of confidence with regard to their household finances and the outlook for the economy, it’s likely they will continue to delay major financial decisions,” he said.

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Australia 2022 home prices post biggest drop since global financial crisis

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The cash rate currently stands at 3.1 per cent and the RBA is expected to raise by a quarter-point. The median estimate of economists is for a further hike after that, for a terminal rate of 3.6 per cent. Markets see a slightly higher peak. BLOOMBERG