Neighbourhoods where house prices have fallen by six figures as interest rates rise

The Reserve Bank has lifted interest rates for a fourth month in a row, taking the cash rate to 1.85 per cent.Prices in pockets of Sydney, Melbourne, Brisbane and Hobart have already dropped by sizeable sums.House prices have fallen by more than $100,000 in three months in parts of the country as rising interest rates reduce borrowing power and accelerate price declines.

The sizable price falls came after the Reserve Bank began lifting the cash rate from a record low of 0.1 per cent in May. The declines are expected to spread, with aDomain chief of research and economics Dr Nicola Powell said the cash rate increases had accelerated the slowdown, which was initially driven by an increased supply of homes for sale, affordability constraints, rising fixed-rate home loans and an increase to the interest rate serviceability buffer.

In Sydney, prices dropped $250,000 in the north Sydney and Hornsby region, $200,000 in the inner west and $187,500 on the northern beaches. Prices in eastern suburbs held steady at median of $3.45 million but were down $200,000 year on year, due to price weakness in previous quarters.House prices in Melbourne’s inner east dropped $107,500, while the median in Brisbane’s west fell $50,000.

Lending to first home buyers fell 10 per cent and was down 29 per cent year on year, while investor lending fell 6.3 per cent in June but was up 17.3 per cent over the year. Raine & Horne Lower North Shore partner Alex Banning said prices were correcting after a period of enormous growth and markets that had higher price rises had further to fall.

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