Australian couples are now putting off buying a home until they know when interest rates will fall, a new study has shown.
Housing prices in Brisbane, Adelaide And Perth Home loans in India have grown by double digits over the past year, even as the Reserve Bank recently raised interest rates at the most aggressive pace since the late 1980s.
But new CoreLogic data suggests a slowdown with Melbourne Property values have fallen by 0.2 per cent over the past 28 days, with prices in Hobart falling by 0.5 per cent.
This is a sign that the sharp rise in interest rates has discouraged buyers, including many couples, from purchasing a home until they know how interest rates will affect them, said CoreLogic economist Caitlin Eze.
“With many household budgets already squeezed by rising interest rates, Cost of living “With debt servicing costs rising, some potential buyers are likely waiting and delaying purchase decisions until the interest rate outlook becomes clearer, which has reduced demand and taken some of the pressure out of the market,” she said.
Homebuyers now have more options as homes take longer to sell, with fewer buyers anticipating interest rate cuts in 2024.
“It is no surprise that the prospect of higher mortgage rates for longer is dampening the appetite of some buyers, and we could see value growth fall further as affordability challenges and low sentiment continue to weigh on demand,” Easy added.
CoreLogic figures showed that the level of new listings since April has been well above the five-year average, “allowing overall inventory levels to build, reducing buyer urgency, and providing more choice and more leverage for buyers at the negotiating table.”
Australian couples are now putting off buying a home until they know when interest rates will fall, a new study has shown.
Ms Eze said potential home buyers now expected the RBA cash rate to remain at a 12-year high of 4.35 per cent for some time, with ANZ and Nab Bank Now both expect to delay interest rate cuts until 2025.
“Some economists have been slow to predict when interest rates will be cut, and consumers have become resigned to the fact that interest rates may stay higher for longer,” she said.
The 30-day interbank futures market expects interest rates to rise again by one in five.
That came after new data last month showed inflation rose 4% in the year through May — above the Federal Reserve’s target of 2% to 3%.
More comprehensive third-quarter inflation data is due on July 31, and financial markets could be affected if the data does not show an improvement in the consumer price index, which reached 3.6% in the third quarter of this year.
Paula Gadsby, senior economist at EY, said the possibility of another interest rate hike remains if inflation remains high, with the labor market continuing to improve after creating 50,200 jobs in June.
New CoreLogic data points to a slowdown with Melbourne property values (pictured) down 0.2 per cent over the past 28 days, while Hobart prices have fallen 0.5 per cent.
“If this reading indicates an acceleration in underlying price pressures, then a rate hike is not out of the question,” she said.
“Our baseline expectation remains that the Reserve Bank will keep cash rates on hold for some time.”
Home prices in the capital rose 9 percent over the past year to $992,473.
Brisbane, where the average house price is $953,028, is now more expensive than Melbourne, where the median price is $948,879.
But nothing beats Sydney, where the average price is $1.466 million.
Since the Reserve Bank of Australia started raising interest rates in May 2022, borrowers in Sydney have typically paid $2,200 more per month on their home loan – or $26,400 per year.
The Reserve Bank of Australia’s 13 interest rate hikes in 2022 and 2023 have caused a 68 per cent increase in monthly variable mortgage payments.
