This months interest rate rise of 0.5 per cent marked the RBA’s fifth consecutive rate rise, taking the cash rate to 2.35 per cent for September.
This takes the cash rate to its highest level since December 2014 and prompts questions of how long rate rises will continue. To date, this is the fastest interest rates have risen in 28 years as the RBA tries to curb inflation.
To date, all four big banks have passed all interest rate rises onto their customers in full. ANZ predicts the cash rate will reach 3 per cent by Christmas as housing prices across Australia drop by up to 20 per cent before a modest fall in interest rates in 2024.
This is bad news for mortgage holders, further affecting the real estate market across the country. There was not much good news for renters either with supply unable to meet demand across the country. With rental rates soaring, the Greens called for ongoing rent caps to address Australia’s rising rents was not well received by the market. Overall, it has been a tough start to the new financial year with cost of living and interest rates biting hard with no relief in sight.
Sydney Property
- After a dismal winter of slow buyer and seller activity, data shows early signs spring could be better. Data from Domain has agents quietly optimistic with a surge in interest in good properties on the market and auction activity recently increasing by up to 16.5 per cent in Sydney.
- Prime Minister Anthony Albanese is backing a call for medium to high density housing in some NSW areas to relieve housing shortages. Currently only 17.5 per cent of NSW homes are medium to high density compared to Greater Sydney with 46 per cent.
- According to Urban Developer, Sydney property values dropped by 2.2 per cent in July. This is the single largest monthly drop since January 1990.
- Since the beginning of the year, property values have now fallen 5.9 per cent from their peak. This is 3.9 percent more than at the beginning of the GFC in 2008 and much faster than the market downturn in 2017 to 2019.
- Metropole data shows the price of houses is dropping faster than the price of units due to the increased demand for more affordable options.
Melbourne Property
- Melbourne’s spring season is set for a slow start with consecutive interest rate rises and high living costs holding people back. Domain chief of economics and research, Dr Nicola Powell, said that while activity levels will increase they could be lower than previous years.
- The new requirement for a seven-star energy efficiency rating for all new homes will push up the cost a further $15,000 on new builds valued at between $250,000 and $350,000.
- Docklands and Southbank apartments are selling well in the $1m to $3m range. Barry Plant Yarra’s Edge branch manager, Geoff White, said they were shielded from a falling market as they had not had the same price gains as other suburbs.
- With Melbourne house prices falling more than 3 per cent since they peaked, auction clearance rates have also fallen. Time on the market is now longer, typically 35 days to sell which is still quicker than pre-pandemic. The good news for buyers is that there are now more properties for sale.
- With four consecutive interest rate rises slashing buyers’ borrowing power, sellers’ are discounting the original asking price by up to 5.8 per cent. Units are being discounted up to 6.7 per cent and properties that need renovating have the biggest discounts because of the high cost of building and trade shortages.
Brisbane Property
- While the median price of houses fell 1.1 per cent, townhouse and unit prices rose 0.7 per cent in July according to CoreLogic.
- Queensland construction company Oracle’s ongoing challenges came to a head in August. It went into liquidation owing creditors around $14 million leaving subcontractors and customers out in the cold.
- According to ANZ predictions, Brisbane property prices will rise up to 1 per cent before falling up to 12.3 per cent next year.
- CoreLogic data estimates that it is cheaper to service a mortgage than paying rent for 41 per cent of properties in the Brisbane area.
Perth Property
- REIWA members reported house sales in Perth increased by 4.6 per cent, unit sales increased 2.4 per cent; but vacant land sales decreased by 12.1 per cent.
- Twenty-nine Perth suburbs recorded a more than 10 per cent median sale price growth to date this year according to REIWA. Mt Hawthorn recorded the highest growth with an increase of 16.3 per cent with North Perth coming in a close second at 15.8 per cent. Other strong growth areas include Warwick (14.8 per cent), Carine (14.3 per cent) and Iluka (14.1 per cent).
Canberra Property
- Although Canberra had higher than normal sales over winter, properties are taking longer to sell according to the Domain Auction Report. Economic uncertainty and continuing interest rate rises means properties are taking 30 days or more to sell compared to just 16 days last quarter.
- An NAB report said it costs less to buy than to rent a house in Canberra suburbs Bonner, Kambah and Ngunnawal. Mortgage payments on units in the suburbs of Franklin, Kingston, Belconnen and Braddon are cheaper than paying rent.
- The ACT Government recognised the difficulty apartment building owners face replacing combustible cladding so has set aside $50 million in concessional loans. So far from 74 applications, 60 received approval.
- The ACT Government’s $150 million commitment to the Housing Affordability Scheme offers loans of between $2,000 and $15,000 with zero interest over 10 years. These are for the purchase of energy efficient items and is now open to all ACT residents.
Adelaide Property
- According to Tim Lawless, Adelaide housing prices are still rising though the market is slowing. The quarterly growth rate up until January was 7.4 per cent but dropped to 3.6 per cent during the last quarter.
- Data from Statista shows rental vacancy rates are at an all-time low at 0.4 per cent. On the back of this, rents rose more than 20 per cent in many suburbs in the last year. Suburbs with the largest rent rises are Brighton (30 per cent), Hyde Park (29 per cent) and Fulham (27 per cent).
- Winter in Adelaide saw an increase in sellers listing their properties. Mawson Lakes recorded a 147 per cent increase followed by Parafield Gardens (87 per cent).
- According to PropTrack data, Adelaide has the most in demand housing market with people from across Australia making lifestyle moves since the pandemic.
Darwin Property
- Darwin property prices took the biggest hit with prices falling in 5.4 per cent of its more affordable suburbs making housing more accessible to the lower end of the market, according to Domain.
- An NAB report said Darwin’s more affordable suburbs were Durack, Zuccoli and Leanyer. It also found it was cheaper to buy than rent a unit in Stuart Park, Darwin City and Larrakeyah.