Property’s seesaw ride & RBA 2.85% Cash Rate, but there’s always a winner

Property’s seesaw ride & RBA 2.85% Cash Rate, but there’s always a winner

CoreLogic’s home value index shows that Brisbane’s house prices slumped by 2% in October, a sharper fall than in any other capital and their largest monthly decline on record.

But Brisbane had a more substantial upswing of 42.7% compared to Sydney’s 27.7%, so it has a higher level to fall from, and 2% drop isn’t much considering owners picked up almost 43%.

At the same time as the property market is slowing, the Reserve Bank of Australia (RBA) lifts its cash rate up by 25 basis points to 2.85%

Sydney house prices dropped by 1.3% during the month and Melbourne by 0.8% significantly smaller falls than their August declines of 2.3% and 1.2% respectively.

Nationwide, the rate of decline also slowed from 1.6% in August to 1.2% in October.

Despite the smaller price falls across Sydney and Melbourne, it is premature to declare that the worst is over for the housing market, according to Shane Oliver, AMP Capital chief economist.

Tim Lawless, CoreLogic research director, said the double whammy of further interest rate increases and surging inflation would stretch household balance sheets well into next year.

“There is a genuine risk we could see the pace of decline re-accelerate as interest rates rise further and at a higher level than expected,” he said.

“Arguably, what we’re seeing in Brisbane is a catch up, considering the market peaked a lot later than Sydney and Melbourne,” he said.