Jan 31, 2023
Australia Home Prices Fall Further as Rate Hikes Weigh on Market
(Bloomberg) -- Australia’s housing market declined further in January, resulting in the median price in Sydney dropping below A$1 million ($703,800) for the first time in almost three years.
CoreLogic Inc.’s national Home Value Index dropped 1%, with every major city recording a fall, data showed Wednesday. Prices in bellwether market Sydney slid 1.2%, while Melbourne and Brisbane fell 1.1% and 1.4%, respectively.
The national index is now down 8.9% 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% 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 stabilize once rates have peaked.
“Until Australians have a higher level of confidence with regards to their household finances and the outlook for the economy, its likely they will continue to delay major financial decisions,” he said.
The cash rate currently stands at 3.1% and the RBA is expected to raise by a quarter-point on Tuesday. The median estimate of economists is for a further hike after that for a terminal rate of 3.6%. Markets see a slightly higher peak.
©2023 Bloomberg L.P.