Interest rate hikes have led to dramatic falls in house prices in what was until recently Australia’s hottest property markets, with two elite suburbs fueling $250,000 – as experts warned worse is coming.
Median property prices plunged $200,000 and above in various parts of Sydney in the June quarter, with homes being the hardest hit, although unit prices also fell.
A leading housing economist said buyers’ borrowing capacity had been “eroded” by interest rate hikes and that as rates continue to rise, prices would continue to deteriorate.
On Tuesday, the Bank of Australia reserve raised cash interest rates to a six-year high of 1.85 percent, with all the major banks forecasting interest rates to continue rising for at least the rest of this year.
Interest rate hikes have led to massive falls in house prices in Australia’s hottest property markets, with two elite suburbs fueling $250,000 (Photo: Sydney auctioneer Adrianna May)
This has brought the cash interest rate from 1.35 percent from its three-year high to its six-year high at 1.85%. This would make someone pay off an average mortgage agent of $600,000, an increase of $169 in their monthly mortgage payments
Falling median house prices
Sydney – North Sydney and Hornsby – $250,000 lower (-8.4 percent)
Sydney – Inner West – $200,000 down (-8.3 percent)
Sydney – Northern Beaches – $187,500 down (-6.8 percent
Melbourne – Inner East – $107,500 down (-6.1 percent)
Sydney – City and Inner South – $90,000 down (-4.7 percent)
Brisbane – West – $50,000 lower (-4.3 percent)
Sydney – Sutherland – $42,500 down (-2.6 percent)
NSW Mid North Coast – $33,500 down (-4.5 percent)
Brisbane – South – $30,000 lower (-2.8 percent)
Melbourne – Inside – $27,000 Down (-1.8 percent)
The increase meant that borrowers with a $600,000 mortgage would pay $169 more each month to pay it back, while those with a $1 million loan would pay an additional $281.
In the Australian suburbs, four of the five biggest plunges in median house prices in June occurred in Sydney, Domain figures say.
Homes in North Sydney and Hornsby hit a median of $2.72 million in June, a shocking drop of $250,000 from the previous quarter. 9 newspapers reported.
That represented an 8.4 percent drop in the three months to March 2022.
Homes in Sydney’s trendy inner city, with dozens of popular suburbs separating the city from the sprawling western suburbs, fell $200,000 in June.
The median for a home in the interior was $2.2 million, a drop of a whopping 8.3 percent.
Homes in North Sydney and Hornsby hit a median of $2.72 million in June, a shocking drop of $250,000 from the previous quarter (Shown, Sydney skyline seen from Sydney’s north)
Homes in Sydney’s trendy inner city, with dozens of popular suburbs separating the city from the sprawling western suburbs, fell $200,000 in June
The rise in interest rates had exacerbated other existing factors in the market — an undersupply of housing in Australia’s low-density cities and inflation eroding people’s purchasing power — said Domain research and economics chief Dr. Nicholas Powell.
“Borrowing capacity has been eroded by higher rates and a higher cost of living…and more is coming in the form of further accelerating a deterioration in prices,” she said.
On Sydney’s sprawling but sought-after Northern Beaches, housing prices plunged $187,500, according to Domain.
The median selling price on ‘the beaches’ was $2,582,500 in June, 6.8 percent lower than the March figures.
Home prices in Melbourne’s northeast, including iconic suburbs such as Fitzroy and Collingwood, fell to $1.66 million, down 6.1 percent or $107,500.
Prices for the city of Sydney and the Inner South fell $90,000 or 4.7 percent to $1,845 million.
Elsewhere, house prices in western Brisbane fell $50,000 (4.3 percent) and $30,000 (2.8 percent) in the south of the city.
Inland Melbourne, house prices fell by $27,000 (1.8 percent).
On Sydney’s sprawling but sought-after Northern Beaches, home prices plunged $187,500, according to Domain
Home prices in inland Melbourne, including iconic suburbs such as Fitzroy and Collingwood, fell to $1.66 million, a slide of 6.1 percent or $107,500 (Pictured, Brunswick Street, Fitzroy)
The regions, which in their own right have become a popular market for young investors priced outside the major cities, also took a hit.
Median home prices in the mid-north coast of New South Wales fell $33,500 to $715,000 in June. That was a decrease of 4.5 percent compared to March.
The house price carnage continued in Sydney, with the median dropping $42,500 (2.6 percent) in June in the southern suburb of Sutherland.
It was the only suburb to suffer major declines in both housing and unit prices.
Sutherland also experienced a massive $45,000 drop in unit prices, which was a 5.6 percent drop from the March quarter.
Sydney’s eastern suburbs saw Australia’s largest median price drop in the unit market, down $90,000 (6.8 percent).
The median sales price for a unit in eastern Sydney was still $1.23 million.
But the biggest percentage drop in units occurred in Hobart, where average prices fell $55,000 (9.2 percent) to $540,000.
The flood-ravaged Sydney northwest also saw a $55,000 drop in unit prices, down 6.9 percent to $745,000.
Prices for the city of Sydney and the inner south fell $90,000 or 4.7 percent to $1,845 million (Pictured, Redfern)
The rate hikes are being used by the Reserve Bank of Australia to fight inflation, and both the RBA and the Treasury expect inflation to reach a 32-year high of 7.75 percent later this year and outside the RBA target band until 2024. will stay. – which means that interest rate hikes will continue for a long time to come.
On Monday, CoreLogic data showed that in July, the median national home price fell 1.3 percent for the third straight month in July.
The numbers showed that wealthy zip codes in major cities are leading the recession, with coastal and tree-changing regions also taking a hit after previously being some of the best performing markets.