Rate rises to drive $150k wipe-out for Sydney prices
Further rate rises, including today’s expected move from the Reserve Bank to raise the cash rate by 25-40 basis points, would plunge Sydney’s housing market into a bigger downturn, experts claim.
Higher rates thinning the pool of potential buyers were the main assumptions behind the predictions of lower prices, but other forces were also identified as likely to drag the market down. PropTrack senior economist Paul Ryan said the Sydney market would be the most sensitive to rate rises because affordability was the most stretched and because household debt levels were the highest.
“Last year’s boom was driven by emotion and rates being really low. There is no way buyers can keep that kind of up when it’s $2.20 for a litre of petrol, $5 for lettuce and rates are going up.”The auction market in May sank to its weakest level since the early stages of the Covid outbreak in April 2020, when on-site sales and inspections were banned.
AMP Capital chief economist Shane Oliver has tipped a peak to trough fall in national house prices of about 10-15 per cent. Commonwealth Bank is forecasting a 10 per cent drop in national prices over the period.
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