Home values saw the sharpest monthly drop in almost four decades in August, with the downturn now spreading beyond the major cities. 7NEWS
Lawless expects the downturn to continue throughout 2022 and potentially extend into next year, depending on interest rate decisions.“It’s hard to see housing prices stabilising until interest rates find a ceiling and consumer sentiment starts to improve,” Lawless said.
“As borrowing power is eroded by higher interest rates and rising household expenses due to inflation, it’s reasonable to expect a further decline in consumer confidence and lower housing demand.” There’s some silver lining though: lower housing prices could mean housing is more affordable. But CoreLogic points out that mortgage costs and rents are rising, and household budgets are stretched.
“The wash-up is that lower housing prices and higher incomes should make home ownership more achievable for non-home owners,” Lawless said. “But headwinds remain in being able to save for a deposit and demonstrate the ability to service a loan amid such a high cost of living.”
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