Australia’s property market is facing a rare price correction, as rising interest rates and less favourable tax settings for investors accelerate a downturn.
Most capital cities recorded winter price falls, according to Cotality data, with Sydney leading the decline. That weakness is expected to continue, as higher inflation could lead to further interest rate hikes, denting demand.
But the recent price falls are not uniform.
In general, suburbs that previously recorded the biggest price increases also cooled the fastest. More affordable homes are also more likely to hold their value, given they are in demand by first home buyers aided by the government’s low-deposit scheme.
Those who have owned their properties for longer are also likely to be sitting on significant gains, even after the recent falls.
In some cities, including Brisbane, Perth and Darwin, home values are still up more than ۱۰% over the past ۱۲ months.
And the falls have not done much to make Australian homes more affordable for prospective homeowners, given rising mortgage repayment rates have cut borrowing capacity.
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AMP notes that while home prices have fallen recently, “it’s just a flick off the top after a ۵۰% surge since the pandemic”.
