For many young Aussies, the idea of owning a home isn’t a normal dream, it’s a Narnia-esque fantasy. It can feel like the only way one can ever own a house is if every multimillionaire landlord sells their property portfolios after releasing that these assets won’t fill the void in their hearts. The odds of this happening is probably slimmer than winning the lottery.
However, a small parcel of hope is on the horizon. According to the financial services company, CoreLogic, the value of Aussie dwellings fell on average by 1.3 percent in July. This is the third consecutive month that this price-point has dropped.
CoreLogic’s Research Director, Tim Lawless, said that this situation is rather significant. “Although the housing market is only three months into a decline, the national Home Value Index shows that the rate of decline is comparable with the onset of the global financial crisis in 2008, and the sharp downswing of the early 1980s,” Lawless noted. “In Sydney, where the downturn has been particularly accelerated, we are seeing the sharpest value falls in almost 40 years.”
So, Why Are Australian House Prices Dropping?
If you have seventeen houses and no friends, you can blame Australia’s high interest rate for your current misfortunes. This is because high interest rates create high mortgages, and high mortgages mean less folks want to buy property, which makes property prices drop. As Lawless explained, “The rate of growth in housing values was slowing well before interest rates started to rise, however, it’s abundantly clear markets have weakened quite sharply since the first rate rise on May 5.”
But regrettably, it’s not just the uber-wealthy that are getting bumped around by the rise in interest rates. “Due to record high levels of debt, indebted households are more sensitive to higher interest rates,” said Lawless.
Related: Is Australia Really in a Rental Crisis?
Related: Interest Rates Are Going Up Again (and Again, and Again)
But Are House Prices Dropping Everywhere in Australia?
There were free capital cities where CoreLogic noted price increases. As per their analysis, the price of Perth places rose by an average of 0.2 percent, Adelaide by 0.4 percent, and Darwin by 0.5 percent.
Additionally, while prices in the other capital cities might be dropping, they’re still at soul-crushing prices. “It’s important to remember the context of these statistics,” asserted Lawless. “While national home sales are falling from record highs, they are still 9.2 percent above the previous five-year average for this time of the year.”
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