Market Essentials - October 2022

This Month in Review

Australia’s house prices continue to fall, driven by reduced lending capacity and rising interest rates, which currently linger between 4% and 5%. According to Capital Economics Marcel Thieliant, this trend is set to continue as central bank looks to cool inflation.

This month the Reserve Bank raised interest rates by another 25 basis points to bring the cash rate to 2.6%, contributing to a further drop in confidence amongst buyers.

Despite the interest rate hikes, mortgage arrears in the second quarter of 2022 are down to 0.82% – the lowest ever recorded by the Dinkum RMBS Index. According to Fitch Ratings, Australian households are in solid shape due to low unemployment rates and high levels of savings that occurred during the pandemic.

According to the Housing Industry Association, there is an evident slowdown in demand for new homes. The ABS echoes this, saying values of work commenced have fallen by 31.2%. This trend is primarily caused by rising construction costs and falling established home prices.

Rapidly rising rents across all major cities, caused by interest rate rises – passed on by the landlords – and record-low vacancy rates, are pushing tenants to a breaking point. This has caused a reaction from peak housing bodies calling for nationally consistent fixed-price lease policies and bans against rent bidding.

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The Market Essentials Report is compiled by Buyside on behalf of Loanscape.  Founded by Josh Masters, Buyside are registered buyer's agents with on the ground expertise in the Sydney and Brisbane property markets.