Oceania

Housing Prices in Australia Fall Amid Rate Hike, Rising Costs

 

Rising interest rates and more expensive living costs have snapped a 20-month streak of increasing housing prices in Sydney and Melbourne.

Prices nationwide fell 0.1% in May, dragged down by a 0.3% drop in the major cities, according to data from CoreLogic.

While annual growth slowed, it was still solid at 14.1% reflecting the huge gains enjoyed over 2021.

Housing prices in Sydney dropped a steep 1.0% in May, while Melbourne fell 0.7%. Sydney prices are down 1.5% from their January peak but still up 23% on pre-pandemic levels.

Most other cities fared better with Brisbane rising 0.8% in May, Adelaide 1.8% and Perth 0.6%.

The regions continued to benefit from a shift to country living and greater space, and prices rose 0.5% in May to be 22.1% higher than a year ago.

 

Prices Weaken in Big Cities

Weakness in the highly priced Sydney and Melbourne markets in part reflected the Reserve Bank of Australia’s move to raise interest rates in early May, the first rise in 11 years.

“Housing has been getting more unaffordable, households have become increasingly sensitive to higher interest rates as debt levels increased, savings have reduced and lending conditions have tightened,” CoreLogic’s research director Tim Lawless said.

“Now we are also seeing high inflation and a higher cost of debt flowing through to less housing demand.”

Supply was turning buyers’ way with listings rising to above average levels in Sydney and Melbourne, while clearance rates at auctions have steadily declined.

Demand had also come off the boil with home sales in Sydney down 33% in the three months to May from the same period a year earlier, while Melbourne was off 21%.

A sustained drop in housing prices would be a drag on consumer wealth given the notional value of Australia’s 10.8 million homes is put at A$9.9 trillion ($7.11 trillion).

 

  • Reuters, with additional editing by George Russell

 

READ MORE:

Chairman, CEO Quit as Australia’s AGL Dumps Breakup Plan

Australian Casino Fined $57m For Illegal China Funds Transfer

Australian Central Bank Warns of More Interest Rate Rises

 

George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

Recent Posts

Hong Kongers Line up for BioNTech Omicron Vaccines – SCMP

Hong Kong residents can now receive the German-made bivalent shots to protect them against the…

59 mins ago

India’s HDFC Raises $1.85 Billion in Largest-Ever Bank Bond Issue

HDFC raised $1.85 billion from the largest-ever bond issuance by an Indian bank on Thursday…

1 hour ago

Asia Shares Rally on Rate Hike Hopes, Covid Curbs Easing

The US Fed Chair’s dovish tone boosted the mood on trading floors while Beijing showed…

2 hours ago

Chinese Developers’ Offshore Creditors Eye Bargains as Outlook Lifts

With Beijing stepping up support for the property sector, some offshore bondholders are looking for…

3 hours ago

Chinese Miner Zijin Vows to Continue Huge Lithium Buying Spree

Zijin has spent $16 billion buying three lithium mines over the past year, but its…

5 hours ago

Asian Markets Rise After Powell Suggests Rate Hikes Set to Slow

Federal Reserve chairman's remarks – that the US Fed could reduce the pace of its…

5 hours ago