Australian property prices: how rate hikes hurt some more than others
- Dec 20, 2023
- 1 min read
The housing market is changing. Everyone knows prices are falling as interest rates rise, but the composition of the market is also changing dramatically as well and if you own property—or would like to—it is important to understand how the parts assemble to form the whole.
Forensically dissecting the housing market lets us understand how it works and gives us the best insights into what will happen in the final quarter of 2022—spring selling season—and in 2023, when interest rates are predicted to finally top out.
Let’s start with prices. They’ve been falling, but not equally everywhere. Prices fell in Sydney first, then Melbourne, and as the next chart shows those cities have seen the biggest falls. That echoes the patterns of the 2017 house price correction, when those markets fell first and recovered first. Within the two big capitals, prices have fallen first in the most expensive suburbs. In those suburbs, what changes hands, primarily, are established homes. Meanwhile prices for newly built homes are rising, due to rising input costs and the fact builders have no spare capacity.
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