Yahoo Finance Down $17,000: Home prices continue downward spiral
Home prices have continued to spiral downwards - falling for the sixth consecutive month, according to new research.
The Corelogic national Home Value Index found property prices fell a further 1.2 per cent in October.
Surprisingly, Brisbane overtook Sydney (down 1.3 per cent) and Melbourne (down 0.8 per cent) and led the declines last month - down 2 per cent.
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Perth fell the least, down a marginal 0.2 per cent.
The pace of declines in Sydney eased over the past two months, after the city previously led the declines.
CoreLogic research director Tim Lawless said it was probably still too early to claim the worst was over.
“Despite the easing in the pace of decline, with Australian borrowers facing the double whammy of further interest rate hikes, along with persistently high and rising inflation, there is a genuine risk we could see the rate of decline re-accelerate as interest rates rise further and household balance sheets become more thinly stretched,” Lawless said.
Despite the ongoing declines, home prices for the most part remained well above pre-COVID levels, meaning most homeowners were still in a positive position relative to their purchase price.
How much have prices eased?
The national median home value fell $9,145 from October to November.
In Sydney, prices fell a whopping $16,404 compared to last month.
In Melbourne, prices were down $7,414 since the start of October.
In Brisbane, the median home price fell $17,402 over the month.
In Adelaide, prices actually increased $4,096 compared to last month's median value.
Households feeling pressure form interest rate rises
The Corelogic report said home values were likely going to continue trending lower until interest rates found a ceiling.
“The bad news for homeowners is most economists have recently revised their cash rate forecasts upwards due to higher-than-expected inflation outcomes,” the report said.
“Mainstream forecasts for the terminal cash rate range from 3.1 per cent to 3.85 per cent, while financial markets are pricing in a peak cash rate closer to 4 per cent.”
At the lower end of the forecasts, a 3.1 per cent cash rate would still see homeowners forking out much more than they probably anticipated when rates were at a record low 0.1 per cent.
A 3.1 per cent cash rate would add around $1,195-$1,420 a month to mortgage repayments relative to pre-rate hike costs on a $750,000 loan.
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