Median house values in most capital cities dropped in February as property buyers pulled back from the market amid soaring interest rates.
Hobart led the biggest losers with a 2.21% drop in house values to $338,500. Sydney house values fell by 1.5% to $577,500, while Brisbane prices fell by 1.29% to $443,000. Even Melbourne - which staged a spectacular performance in the previous month - saw values falling by 0.98% to $469,000.
However, Adelaide bucked the downtrend, with house values increasing by 1.35% to $367,000. Canberra also managed a modest 0.11% increase in values to $462,000.
Units performed slightly better, with only Melbourne and Sydney recording negative growth.
"The numbers tell the story," said John Edwards, CEO of Residex. "The recent RBA interest rise has had an impact and it's been significant. No city in Australia has been immune. Previously, adjustments were limited to the lower socio-economic areas of the cities. However, the interest rate increases and the margin calls resulting from an adjusting stock market, whose growth has been significantly funded by margin lending, are now having a large impact."
Edwards noted that even though the economy is slowing, he believed there will be more rate rises to come - either from the RBA or the banks or both - in the near future. "[The] RBA seems to be more intent on keeping inflation in check than anything else," he said.
While the outlook appears gloomy, Edwards said he believes the housing market will show growth again soon, but rental returns will grow very strongly in the meantime and over the long term. "There are going to be an increasing number of mortgage default sales," he said. "Suburbs closer to the city are going to have the highest rental increases and we're going to find bargains in these suburbs as mortgage in possession sales take place."
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