Kathrine Frich
The rest of the country tells a completely different story.
Buying a home usually feels like a solid, long-term financial bet.
But economic landscapes can shift rapidly when central banks step in to change the rules of the game. Now, homeowners in one major metropolitan hub are bracing for a painful reality check.
Facing a harsh drop
Melbourne is officially on track to deliver the worst property price performance of any Australian capital city this year.
According to a fresh report published by realestate.com.au on Thursday, property values in the Victorian capital will likely fall by four percent by the end of December.
That percentage translates to a significant financial hit for local homeowners. The median price of a house in Melbourne is expected to sink from $995,000 down to $955,200.
Sydney is also bracing for a noticeable downturn. Experts predict a three percent drop in real estate values across the harbour city.
Pausing the hikes
Meanwhile, the rest of the country tells a completely different story. Every other Australian capital city is projected to see positive price growth before the year finishes.
These gloomy forecasts for the two largest cities arrive just after a major banking decision.
On Tuesday, the Reserve Bank of Australia announced its decision to keep the cash rate steady at 4.35 percent.
This pause follows a rapid series of three consecutive interest rate increases. Even so, RBA Governor Michele Bullock refused to rule out the possibility of future rate hikes if the economy requires them.
Squeezing the buyers
Those previous hikes have already placed heavy downward pressure on the entire housing sector.
Angus Moore, an executive manager at REA Group, explained the current market dynamics to SkyNews.com.au earlier this week.
“The fact that we’ve seen three rate hikes is clearly weighing on buyer demand; it’s reducing borrowing capacities that are flowing through to what we’re seeing in auction markets,” he said.
He noted that the financial strain extends beyond just the auction block. “It’s also flowing through to home prices, which have been largely stalled out nationally,” Moore added.
Paying the price
Regular families are definitely feeling the pinch from these strict monetary policies.
SkyNews.com.au reported that a typical household carrying a $600,000 mortgage over 25 years has already absorbed a massive blow.
The recent rate increases added roughly $272 to their regular monthly repayment bills.
Sources: realestate.com.au, SkyNews.com.au, Reserve Bank of Australia, REA Group
