As a result of rising borrowing costs and a cost-of-living crisis, Sydney’s home values experienced their steepest decrease in nearly 40 years in July, and the decline throughout Australia as a whole accelerated.
According to data released on Monday by real estate consultant CoreLogic, prices nationwide declined 1.3 percent in July compared to June, when they did so by a 0.6 percent margin. Prices were still 8.0% higher than the previous year, indicating significant gains over 2021 and the beginning of 2022.
The decline was focused in the major cities, where prices fell 1.4% in July and annual growth slowed to 5.4% from above 20% earlier in the year.
Sydney’s decline gained momentum as values dropped 2.2 percent in the month, while Melbourne’s dropped by 1.5 percent. Sydney’s annual rise slowed to just 1.6 percent, a far cry from the euphoric years of 2021 when prices increased by a quarter.
Despite the fact that the housing market has only been in a downturn for three months, Tim Lawless, research director at CoreLogic, stated that the rate of decrease is equivalent to the start of the global financial crisis in 2008 and the early 1980s’ steep downturn.
The collapse has been notably hastened in Sydney, where we are witnessing the sharpest value declines in almost 40 years.
As many turned to country living and more space, even the regions started to cool as prices dropped 0.8 percent, ending a protracted bull run.
The Reserve Bank of Australia (RBA) raised rates for three consecutive months and is widely expected to do so again this week in an effort to rein in rising inflation, which has contributed to the fall in borrowing prices.
Markets are betting that the current cash rate of 1.35 percent could rise to 3.40 percent by the middle of the next year. The big banks have also tightened lending rules and dramatically increased borrowing prices for new fixed-rate mortgages.
Given that the notional worth of Australia‘s 10.8 million homes increased by A$210 billion ($146.52 billion) in the first quarter alone to reach A$10.2 trillion, a sustained decline in prices would be a drag on consumer wealth.
