Housing prices fall for the eleventh month in a row as rate hikes ‘send chills through the market’

Housing prices have fallen for the eleventh consecutive month, as mortgage rate rises send a chill through the market.

August saw a nationwide median dwelling price decline of 0.3 percent, a fall of 2.2 percent since September last year.

Westpac’s move to hike variable mortgage rates for owner occupiers, combined with tighter access to credit, is likely to see prices fall even further this spring.

Housing prices have fallen for the eleventh consecutive month as mortgage rate rises send a chill through the market (stock image)

Westpac’s move to hike variable mortgage rates for owner occupiers combined with tighter access to credit is likely to see prices fall even further this spring (stock image)

CoreLogic head of research Tim Lawless said the credit environment was the major factor in slowing market activity.

‘Fewer active buyers has led to higher inventory levels and reduced competition in the market,’ he said. 

‘Collectively, these factors have been compounded by affordability challenges, reduced foreign investment and a rise in housing supply.’

Mr Lawless said Westpac’s decision to raise rates would have a dampening effect on the market.

‘The news that the first of the big four banks will lift variable mortgage rates in September is likely to send a chill through the housing market,’ he told ABC News.

‘With household debt at record highs, borrowers are likely to be sensitive to small movements in the cost of debt and this upwards shift in mortgage rates is a negative for housing market conditions.’

August saw a nationwide median dwelling price decline of 0.3 percent, a fall of 2.2 per cent since September last year

Only three of Australia’s capital cities saw housing price increases in August – Adelaide, Darwin and Canberra.

Melbourne and Perth showed the biggest declines – 0.6 percent in each city – while prices in Sydney fell 0.3 percent.

Brisbane prices fell 0.2 percent, while Hobart saw a 0.1 percent fall in a year, although the Tasmanian capital enjoyed a 5.6 percent annual increase.

Melbourne performed the worst over the last quarter, and Adelaide took over from Hobart as the strongest growth market. 

Sydney and Melbourne make up about 60 percent of the country’s housing market by value, and 40 percent by number, and their weak performances drag down the nationwide and combined capitals figures. 

Mr Lawless said Westpac’s decision to raise rates would have a dampening effect on the market (stock image)

 

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