CoreLogic’s daily dwelling values index shows that Brisbane home values continue to fall at a swift pace, down 5.4% over the past quarter:
Brisbane house prices falling at a rapid pace.
Brisbane home values are now down 6.2% from their mid-June peak, with 1.6% of losses already recorded so far in October:
Brisbane house prices down 6.2% since mid-June.
According to 7News (below), experts are tipping that Brisbane home values could fall by 20% peak-to-trough, which would mean that we are only around one-third of the way through the correction:
According to the report:
“Experts are tipping falls of almost 20% across the South East before the end of next year”…
“Lending power [has been] slashed sending demand and property prices into freefall”…
“Economists [are] warning they [house prices] could dive 15% next year in Queensland”.
“On a $750,000 home, the new value would be slashed to $637,500″…
Brisbane home values experienced the nation’s largest rise over the pandemic, with CoreLogic recording 45% price growth between end-February 2020 to the peak in June 2022.
Therefore, it makes sense that Brisbane home values will retrace sharply in response to the Reserve Bank of Australia’s (RBA) aggressive rate hikes.
But even if Brisbane house prices were to fall 20% peak-to-trough, they would still remain 16% above their pre-pandemic level. Accordingly, only those that purchased Brisbane property in late 2021 or early 2022 would be severely ‘in the red’ and facing potential negative equity.
The bigger issue is the impact on broader consumer spending from the sharp rise in mortgage rates. The 2.5% of tightening already delivered by the RBA has lifted average mortgage repayments by 34%, adding around $750 a month in repayments on a $500,000 variable rate loan:
As the RBA hikes rates further, the disposable income of mortgage holders will necessarily reduce, limiting their consumption spending – the economy’s biggest growth driver.
That is where the RBA’s aggressive rate hikes will really bite.
