RBA’s November interest rates decision: Live updates
Housing downturn could break records, expert warns
Australia’s housing market has now been falling for seven straight months, and another rate rise today could add to the pressure.
The latest REA Group Home Price Report found home values are 4.3 per cent below their March peak and 1.9 per cent lower than a year ago.
For Tim Lawless, research director at Cotality, the speed of the decline is what stands out.
“In the historical context, this is the fastest downturn over a seven-month period we’ve seen since at least the 1980s,” Lawless told SBS’ On the Money.
“It is looking like this downturn is set to break a few records.”
What have rates got to do with it?
Lawless said higher rates are only part of the story.
Affordability pressures, rising inflation, higher fuel prices and weaker consumer confidence have all weighed on buyer demand over the past year.
“I think all those things are providing some level of headwinds to housing demand,” he said. “This is very much a demand-driven downturn.”
Looking ahead, the outlook may depend heavily on what happens to interest rates next.
Lawless said home values are likely to keep falling into next year, with any stabilisation likely depending on when the RBA will start cutting rates.
“Most economists seem to think that we’re probably not going to be seeing rate cuts until the middle of next year or through the second half of next year,” he said.
“That’s probably the sort of timing we should expect that the market will stabilise, if not move into some level of subtle growth.”
— Alexandra Koster, with additional reporting by SBS’ On the Money.
