SYDNEY — House prices in Australia’s biggest cities are falling amid predictions that official interest rates could rise sharply by December while affordability remains crunched.
Data from property-research group CoreLogic shows that house prices in the biggest cities of Sydney and Melbourne fell over the three months to April, the weakest trend since harsh Covid-19 lockdowns were put in place in mid-2020.
Sydney house prices fell 0.5% over the three-month period, while Melbourne prices dropped 0.1%, according to CoreLogic.
Nationally, prices rose 0.6% in March, supported by solid gains in Brisbane, Perth and Adelaide, the data showed.
The figures come a day before the Reserve Bank of Australia is expected to raise interest rates for the first time since 2010, with financial markets betting that it could deliver the equivalent of ten 25 basis-point increases in the official cash rate by December.
Speculation that the RBA might hike rates this week gathered momentum after the recent release of first-quarter inflation data showed that the consumer price index rose 5.1% in the first quarter from a year earlier, with core inflation printing well above the central bank’s 2% to 3% target band.
CoreLogic Research Director Tim Lawless said that broadly speaking, the national market had passed its peak.
Based on rolling quarterly change, Brisbane dwellings moved through a peak rate of growth in December last year at 8.5%, slowing to 5.7% over the most recent three-month period, he said. Similarly, Adelaide moved through a peak in the trend rate of growth in January at 7.4%, reducing to 5.4% in April.
“With the RBA cash rate set to rise, potentially as early as tomorrow, we are likely to see a further loss of momentum in housing conditions over the remainder of the year and into 2023,” he added.