CoreLogic’s daily dwelling values index shows that Sydney house prices are collapsing following the Reserve Bank’s 1.25% of interest rate hikes since May.
As shown in the next chart, Sydney dwelling values began to fall sharply after the initial 0.25% May rate hike, with the pace of falls accelerating following this month’s 0.5% hike:
Sydney dwelling values have collapsed since the RBA commenced its rate hiking cycle.
Over the first 13 days of July, Sydney dwelling values have plummeted 0.83%, suggesting values could fall by around 2% over the full month:
Sydney dwelling values plunge in July.
Quarterly value losses have also accelerated to 3.5%, with the pace of decline accelerating recently:
Sydney the house loss leader.
Sydney is the nation’s most sensitive housing market to interest rate rises. This is because it is the most overvalued relative to both incomes and rents, and also has the most heavily mortgaged households.
The median economist forecasts an official cash rate (OCR) of 2.85% by mid next year, meaning the OCR would rise another 1.5% from its current level.
The futures market is even more bullish, tipping a peak OCR of 3.6% by May 2023.
If the Reserve Bank follows either path and persists with aggressive interest rate hikes, it risks crashing Sydney’s housing market.
