Rising interest rates are causing a divide in the property market, with prices for luxury homes falling faster than those for more affordable options. This trend is driven by reduced borrowing capacity for buyers, pushing demand towards cheaper alternatives. While affluent suburbs see discounts, budget-conscious buyers face intense competition, highlighting persistent affordability challenges.
Prices for more expensive homes are falling faster than prices for cheaper homes, as high interest rates reduce buyers’ borrowing capacity and drive demand towards more affordable options.
In Melbourne, the top quartile of the market – homes worth $1.09 million or more – dropped 2.7 per cent in value over the past three months. The most affordable quartile – priced at $604,000 and below – fell only 1.5 per cent.Brisbane’s top end eked out a gain of 0.4 per cent in the last quarter and its cheaper properties rose 2.2 per cent, while Perth’s top end managed a 0.6 per cent rise but more affordable homes gained 2.1 per cent.
“The low end of the market becomes more competitive, more buyers are priced out of the high end and a greater buyer pool is focused on the lower end of the market.”“That’s simply a function of higher interest rates,” the chief executive of propertybuyer.com.au said. “We’ve seen more outflow of people chasing the cheaper areas, moving out of expensive suburbs into cheaper suburbs and moving interstate.
“The competition is very strong and days on market are really tight,” she said. “Comparing the middle ring and inner ring housing market, to the outer ring affordable houses, is chalk and cheese.”
Housing Market Interest Rates Affordability Luxury Homes Competition
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