Property prices are falling in two in five suburbs, offering house hunters better bang for their buck. But as rising rates hit borrowing power, some have to compromise further to buy their next home.
Home values fell across more than 40 per cent of capital city house and unit markets over the June quarter.
But many buyers still have to compromise when searching for their next home, experts say, because of cuts to borrowing capacity and a pullback in the number of homes listed for sale, reducing their level of choice. This was limited to buyers whose borrowing capacity had remained relatively unchanged, despite three consecutive interest rate hikes — that lifted the cash rate from a record low of 0.1 per cent to 1.35 per cent — and rising living expenses.“If you’ve gone back to the bank and they’ve said we’re not going to lend you as much money … those folks are having to reassess what it is they can buy. They may have to go further out, or reassess the size of property or [the quality].
CoreLogic economist Kaytlin Ezzy said: “Signs of a slowdown and falls in value were already evident before the rate rises, but are now becoming more widespread across Sydney and Melbourne, and beginning to impact the more expensive areas of Brisbane, Canberra and Hobart.” Although property prices are declining, some house hunters still have inflated expectations about what they could secure for their budget, said Sydney buyer’s agent Hamada Alameddine of BuyerX. Others were spot on in their expectations, but a lack of suitable stock, and rising interest rates, meant their property wishlist and search area had started to change.
The lag time in vendors adjusting their price expectations to meet the market also meant some buyers had to take their reduced borrowing capacity elsewhere, Jones said, swapping a suburb like Bronte for Coogee or Randwick.
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