Prices have been falling since they peaked in April and many economists expect that by the time the housing market hits its lowest point, prices will have fallen by at least 15 per cent. If that happens, it would make it the largest downturn on record in Australia.
The current property market is particularly sensitive to interest rate changes, given homeowners are facing a “quadruple whammy”, stretching them to their limits.“The rate of decline is far worse than what we saw through the previous downturn. Affordability is more stretched, household indebtedness is higher and then this dual factor of inflation and rising interest rates is more hard hitting,” says Tim Lawless, Asia-Pacific research director at CoreLogic.
First, when it comes to the capital cities, you tend to see Sydney and Melbourne lead the cycle and smaller cities such as Brisbane and Adelaide follow. Although there are exceptions. At the lower end of the market, in regions like Blacktown, Central Coast and south-west Sydney, house prices are still rising.
Mr Lawless points out that through every down phase, the annual gain in housing values in the 12 months leading up to the market peak has been equal to or higher than the entire peak to trough decline that follows.
Finally, affordability
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