Yahoo Finance $50,000 drop: House prices in record freefall
Sydney, Melbourne, Brisbane and Canberra house prices dropped at their fastest rate on record for the September quarter, following rising interest rates.
House prices dropped 4 per cent over the quarter across the combined capital cities, wiping almost $43,000 off the median sale price, Domain’s latest House Price Report found.
Houses are now 4.9 per cent below their price peak in March of this year, a loss of more than $50,000.
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“Many borrowers and potential home buyers will have never experienced anything like this before and, justifiably, it has had a significant impact on consumer sentiment,” Domain chief of research and economics Dr Nicola Powell said.
The rapid rise in interest rates, which have increased at their fastest rate since 1994, are named as the main cause for the housing downturn.
Interest rates and surging inflation have also weakened the borrowing power of prospective buyers.
“Interest rate hikes and strong inflation levels have damaged borrowing capacity and increased home loan costs, adding an additional $1,482 a month to a $1 million home loan,” Powell said.
“Today’s high household debt heightens the vulnerability of households to rising interest rates and could exacerbate a downturn.”
At the same time, supply of housing has normalised from its low and it is now 10 per cent higher than last year across the combined capitals.
This provided buyers greater choice and opportunity to negotiate, Domain said, which could also weigh on prices.
Prices are expected to continue to fall further, with rising interest rates continuing to put pressure on the housing market.
However, if the Reserve Bank slows its interest rate hiking, this could soften the downturn.
How much have property prices dropped?
Here’s how median housing prices changed in the September quarter:
Sydney 5.2 per cent drop to $1.46 million
Melbourne 4.3 per cent drop to $1.03 million
Brisbane 4.3 per cent drop to $811,312
Adelaide 0.6 per cent increase to $795,093
Canberra 5.8 per cent drop to $1.10 million
Perth 1.5 per cent drop to $645,946
Hobart 2.6 per cent drop to $741,275
Darwin 3.9 per cent drop to $623,819
Source: Domain September 2022 House Price Report.
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