Data from InfoTrack shows that the 3.0% of cumulative interest rate hikes from the Reserve Bank of Australia (RBA) has tanked property sales.
InfoTrack’s data shows that property sales have dived by 40% in Victoria and Queensland this year, with NSW sales also down 38%.
In fact, October was the “worst month” for buying activity since the RBA commenced its interest rate tightening cycle in May.
InfoTrack global head of property John Ahern said “our figures show buyers and sellers have become increasingly pessimistic in the past 12 months as Australians worry more about inflation and the broader economy”.
“Clearly economic concerns are weighing on the minds of potential buyers and sellers”.
“Due to the consecutive month-on-month effect of the rate rises, we’re seeing a more significant weakening of consumer sentiment when it comes to the housing market”, Ahern said.
CoreLogic also reported a 13.3% national decline in property sales in the year to November, led by the three largest states – NSW, Victoria and Queensland:
Auction clearances have also turned sharply lower, with last weekend’s 54.3% national final clearance rate the lowest since the week ending 31 July 2022:
Finally, Westpac’s latest consumer sentiment survey, released on Tuesday, revealed that Australians are “deeply pessimistic” about the housing market, with the ‘time to buy a dwelling’ index falling 2.9% to 74.9, holding near cycle lows and “firmly in the doldrums”.
Westpac’s survey also showed that Australians are no longer interested in purchasing real estate and prefer to save or pay down debt:
Who can blame them given the 3.0% of cumulative rate hikes has lifted variable mortgage repayments by 41% versus their April pre-tightening level?
Borrowing capacity has, therefore, been sharply reduced and servicing a mortgage has simply become too expensive for many prospective buyers.
Accordingly, Australian house prices will continue to decline until the RBA changes course and begins cutting rates.
