Collapse in Australian real estate market intensifying
2023.01.31 09:01
Collapse in Australian real estate market intensifying
By Ray Johnson
Budrigannews.com – In January, Australia’s house prices continued to fall for the ninth month in a row due to high mortgage rates, which are reducing household wealth and reducing consumer spending, which will exacerbate economic stress.
CoreLogic, a real estate consulting firm, released data on Wednesday showing that national prices decreased by 1% in January compared to December, when values decreased by 1.1%.
Prices were 7.2% lower than a year ago. They were also 8.9% lower than when they were at their peak in April. This was the largest and fastest decline in values since at least 1980 as the Reserve Bank of Australia began the most aggressive campaign of tightening in modern history.
Prices fell 1.2% in the month to 13.8% lower than a year earlier in Sydney, while prices fell 1.1% in the month to 9.3% lower than a year earlier in Melbourne.
In the month, prices in the combined capital cities decreased by 1.1%, while prices in the outlying regions, which have performed better during this housing downturn, decreased by 0.8%.
After prices experienced the largest drop since 2008 last year, CoreLogic’s research director, Tim Lawless, does not anticipate that listing and purchasing activity will return to average levels until consumer sentiment begins to improve.
The fact that there were 22.2% fewer new listings in capital cities in January compared to the same time last year suggests that most homeowners are prepared to endure this downturn.
Lawless stated:
“It’s likely they will continue to delay major financial decisions until they have a higher level of confidence with regard to their household finances and the outlook for the economy.”
To quell soaring inflation, the RBA increased interest rates by 300 basis points to a 10-year high of 3.1%. When the Board meets for the first time this year, investors are betting that rates will rise by 25 basis points more next week.’
With December retail sales falling to their lowest level in more than two years, consumers are already feeling the pinch from rising borrowing costs and inflation. This is a warning for the economy.
