Poor affordability, surging inflation and lower borrowing capacity have hit demand for houses in Sydney, data from Domain shows, and prices are set to fall further.
Sydney’s house prices are now falling five times faster than units as poor affordability, surging inflation and lower borrowing capacity hit demand, data from Domain shows.
“Potential buyers might be in the driving seat, but they are also facing worsening mortgage affordability as the recent cash rate increases added around $726 a month to a $1 million home loan. This has clearly weighed on buyer sentiment, adding to further price falls.“I think a peak-to-trough decline of 10 per cent and 15 per cent in Sydney house prices is possible, particularly in the backdrop of a 40 per cent rise during the pandemic.
“These quarterly statistics reveal that affordability constraints, reduced borrowing capacity and the relative underperformance and perceived value [that] units offer will help steer buyer demand to affordable options, likely to be both units and entry-priced houses,” Dr Powell said.“We’re now seeing the record price gap between property types narrowing because of the deeper house price falls as the downturn gathers momentum.
“Suburbs that have a higher purchase price, and therefore greater debt, place households in a vulnerable position to rising interest rates.”In Brisbane, average house prices hit another high of $840,594. However, the pace of growth has slowed to just an 0.2 per cent rise over the quarter, suggesting the strongest upswing in 18 years had lost momentum.
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