SYDNEY
Australian house prices have fallen 3.6 percent from their peak earlier this year, according to Cotality data, with Sydney and other high-value markets leading the downturn.
The Reserve Bank of Australia has lifted the cash rate to 4.6 percent, and elevated inflation creates risk of further hikes. Bond yields have surged in tandem, compressing the spread between mortgage rates and funding costs and raising duration risk for borrowers with variable-rate or refinancing loans due over the next 12 months.
Economists expect property values to fall further, with some forecasting declines exceeding 10 percent from current levels. The downturn marks a sharp reversal from the three-year surge through March, when prices jumped 26 percent.
Labor's May budget reforms have accelerated the selloff. The government removed negative gearing for new investors on new builds, eliminating a core incentive for property investment. Tim Wilson, the Liberal Treasury spokesperson, said Australian families are "watching the value of their biggest asset, their family home, fall through the floor."
Newer homebuyers have borne the brunt. Alex Hogan, a 41-year-old Queensland resident who purchased a block of land to build a family home after being priced out of the established market, now faces rising construction costs and anticipated value declines for his finished property. He said further market weakness could be justified if it addresses the housing affordability crisis.
Eibhlinn Cassidy, a 30-year-old junior doctor in Melbourne, bought an apartment two years ago. When she refinances next year, her loan repayments could spike if the property value continues to slide.
