Australians continue to support real estate despite rising interest rates


  • House prices have fallen nationally, although they are still much higher than a year ago in most markets
  • An increase in Australian homebuyer savings has occurred since 2005, thanks to the GFC and Covid
  • With high savings, those with large savings actually reap the benefits of higher interest rates.

Since the Reserve Bank of Australia (RBA) began to tighten monetary policy five months ago, the market has reacted in predictable ways.

There were minor price drops in the affordable price ranges with larger drops in the Melbourne and Sydney prestige markets.

Data from SQM Research reflects a slowdown in asking prices nationwide, however, a sharp decline across the board has yet to be seen.


National real estate brand First National noted that despite this, Australians are strongly supportive of real estate.

“Depending on where you live in Australia, home values ​​may have increased by as much as 36.5% in the two years to the end of February 2022, but we have only seen declines of around 3.5% over the past four months,” said First National Real Estate Managing Director Ray Ellis.

“While it is true that prices in the higher ranges have seen more pronounced adjustments, average house prices are still significantly higher than they were 12 months ago everywhere in Australia, with the exception of Melbourne and Sydney, where there were relatively small adjustments of -2.1% and -2.5%. percent respectively. “

Mr Ellis said one of the reasons house prices have shown such resilience was due to the upward trend in larger financial deposits since 2005. An increase in savings occurred during the GFC and COVID pandemic, while the period of lower fuel and electricity prices in 2015 and 2016 also helped in this regard.

The ratio of housing interest payments to income also fell to its lowest level since 1999. Household debt fell as a proportion of house values, according to RBA data.

“For just under 40% of Australian households with mortgages, the interest burden fell to its lowest level in 42 years in the March quarter,” Mr Ellis said.

“These households will save while discretionary items like fuel, electricity and food will continue to rise, but the 30% of mortgage-free households will enjoy higher interest rates and be able to spend more. With record levels of savings, these households actually prefer higher interest rates.

“The period of rising interest rates and inflation ahead will certainly present challenges for many.

“However, Australians have not turned their backs on property. In fact, we are already seeing signs that first-time home buyers are stepping up their activity and the upsurge in demand is combining with low levels of inventory for driving up prices in many places across Australia.

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