Economist warns rate rise ‘all but certain’

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National home prices have fallen for the eighth consecutive month, largely due to rising interest rates, according to the latest data from PropTrack.

A 0.16 per cent drop was recorded nationally in November, with capital city prices now 3.09 per cent below their level a year ago.

Darwin and Melbourne had the largest declines, but prices in Adelaide climbed 0.25 per cent to a new peak.

PropTrack senior economist Eleanor Creagh said rising interest rates had quickly “rebalanced” the housing market following last year’s “extreme” growth.

“National home prices have fallen for the eighth month in a row, with the fastest interest rate tightening cycle since the 1990s weighing on home prices in most parts of the country,” she said.

PropTrack senior economist Eleanor Creagh says rising interest rates have quickly “rebalanced” the housing market.PropTrack senior economist Eleanor Creagh says rising interest rates have quickly “rebalanced” the housing market.

“Though the pace of price falls remains significantly less than the larger falls seen in June and July when interest rates first started rising, the downturn has continued to deepen as interest rates continue to rise.”

Ms Creagh said a further 0.25 per cent interest rate rise in December, which would take the cash rate above three per cent, was “all but certain”.

“With additional rate rises on the horizon, borrowing costs will continue to increase and maximum borrowing capacities will further reduce,” she said.

“The significant reduction in borrowing capacities implies further price falls.”

But Ms Creagh predicted price falls were likely to ease once interest rates stopped rising next year.

Annual change in home prices. Picture: PropTrackAnnual change in home prices. Picture: PropTrack

Sydney

Prices fell 0.14 per cent and are now down 6.44 per cent over the past year.

They have been dropping since March and Sydney has experienced the greatest falls.

Prices are plummeting fastest among expensive regions and property types as interest rates have gone up.

“Sydney, the priciest capital city nationally, is bearing the brunt of these effects,” Ms Creagh said.

“However, the pace of price falls has eased in Sydney from the faster pace seen in June and July.”

Brisbane

A slight fall of 0.04 per cent in November now has Brisbane at 2.71 per cent below its peak, which was in April.

“Brisbane is the second strongest capital city market, with prices up 4.72 per cent over the past year,” Ms Creagh said.

“However, conditions in Brisbane have quickly shifted due to the fast pace of rate rises.”

Perth

The WA capital is holding up better than other capital cities despite a small drop of 0.04 per cent.

“Prices have increased 4.13 per cent over the past year and remain just shy of peak levels,” Ms Creagh said.

National home prices have fallen for the eighth month in a row, largely due to rising interest rates. Picture: NCA NewswireNational home prices have fallen for the eighth month in a row, largely due to rising interest rates. Picture: NCA Newswire

Darwin

Prices fell 0.49 per cent to sit just 0.77 per cent above levels seen in November last year.

Melbourne

The Victorian capital slipped 0.33 per cent, which was the second largest fall among the capital cities.

Prices are now 4.49 per cent below November 2021 and 5.30 per cent below their recent peak.

“Price falls are expected to continue in Melbourne in the period ahead as interest rates continue to rise, further reducing borrowing capacities,” Ms Creagh said.

Adelaide

The strongest performing capital city over the past year saw prices rise 0.25 per cent to another peak.

Adelaide has recorded annual growth of 12.63 per cent.

“Demand for more affordable regions and larger homes has buoyed the Adelaide market and is likely to continue to do so,” Ms Creagh said.

Hobart

A slip of 0.27 per cent now has Hobart at 2.92 per cent below its peak in April.

However, prices remain 1.06 per cent higher than levels seen in November last year and are up 43.8 per cent compared to pre-pandemic levels.

Canberra

Prices in Canberra were relatively flat in November, dropping just 0.02 per cent.

Prices are now sitting 4.20 per cent below their peak in March and are below their level in November 2021.

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