First home buyers squeezed by soaring prices

Higher-priced properties are typically the most volatile and sensitive to changes in interest rates.

This volatility is illustrated by CBA below, which plots quarterly dwelling value growth for the most expensive homes against the least expensive homes.

This greater volatility reflects the fact that the market for the most expensive homes is thinner and when mortgage rates fall, higher-income households see a bigger boost in their borrowing capacity (and vice versa).