The Australian property market has notched its deepest downturn on record, after national home values fell 8.4 per cent since their May peak, CoreLogic figures show.
Australian property values have fallen in less than nine months by more than they fell in 20 months during 2017-2019.Because interest rates have a lagged effect, further property value falls are likely.
CoreLogic head of Australian research Eliza Owen said the housing market is more sensitive to rate rises than in the past because households have more debt now.Housing debt sits at 188.5 per cent of incomes, on RBA figures, compared to less than 50 per cent in the 1990s, she said.
Owen said for recent home buyers, the falls are not significant unless they need to sell their property. AMP Capital chief economist Dr Shane Oliver said he expected the record decline in values to continue until a few months after the cash rate stops rising. Rising rates had the largest effect on buying power, Oliver said, but a confluence of other factors also contributed to the speed of the decline.
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