Australian house prices continue to fall in June as interest rate hikes bite

House prices in Australia are falling, with housing experts expecting to see more significant downtrends in the coming months as the Reserve Bank of Australia (RBA) continues to hike the rate of Treasury.

The CoreLogic Home Value Index fell 0.6% in June, the second month in a row, following the RBA’s second cash rate hike in 2022. The index for the June quarter also fell 0.2%.

“Given that inflation is expected to remain stubbornly high for some time and interest rates are expected to rise significantly as a result, it is likely that the rate of decline in home values ​​will continue to grow and decline. become more widespread,” said CoreLogic research director Tim Lawless. .

The drop in national home values ​​was attributed to the significant monthly drop in house prices in Sydney (down 1.6%) and Melbourne (down 1.1%) – the two main housing markets in Australia.

However, Adelaide stood out among the capitals as it saw a 1.3% increase in house values.

While property prices in the Australian region rose further in June, overall growth slowed to just 0.1%.

Australian home values ​​fell after RBA cash rate hike

It should be noted that most housing markets in Australia have seen sharp declines in home value growth since the RBA began raising the cash rate in May.

When the cash rate hit 0.85% in June, many Australian banks quickly raised their variable and fixed interest rates for mortgage products.

A sign for a property sold at McMahons Point in Sydney, Australia, on May 5, 2022. (Brendon Thorne/Getty Images)

“The Reserve Bank’s cash rate increases in May and June ended an era of home loan interest rates below 2%, which we may never see again,” Steve said. Mickenbecker, of financial comparison website Canstar.

In the latest development, the Commonwealth Bank of Australia, the country’s largest bank, suddenly raised its fixed interest rates for homeowners and investors by 1.4% on June 30. And other banks are expected to follow suit in the coming days.

“Property prices have started their descent,” said Gareth Aird, head of Australian economics at Commonwealth Bank.

In May, the CoreLogic home value index recorded the first decline since September 2020 due to falling house prices in Sydney, Melbourne and Canberra, Australia’s second most expensive property market.

Nonetheless, the national home value index rose 11.2% in the 12 months to June 30.

Alfred Bui

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Alfred Bui is an Australian journalist based in Melbourne and focuses on local and business news. He is a former small business owner and holds two master’s degrees in business law and business law. Contact him at [email protected]


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