Geelong’s median house value is about $12,000 lower than the same time last year, new data shows.
Falling home prices will provide little comfort to homebuyers if the Reserve Bank board raises interest rates on Melbourne Cup Day.
Geelong home prices have continued to slide as a national downturn in the property market deepened in October, the latest realestate.com.au Home Value Index revealed.
The median value for houses across Geelong decline marginally in October, and fell across the quarter, to reach $799,000, the report, released on Monday, revealed.
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That’s a 1.51 per cent – or $12,000 – decline year on year.
While unit values rose marginally last month, they remained depressed over the longer term, with the $577,000 median unit value now $5000 – or .92 per cent – lower than a year ago.
Realestate.com.au senior economist Eleanor Creagh said the national downturn, now stretching seven consecutive months, is becoming more widespread across mainland capital cities as higher prices and a squeeze on borrowing capacity starts to bite.
Melbourne remained the only capital city where home prices are lower than five years ago, reflecting a prolonged period of relative underperformance for Melbourne’s housing market, she said.
“Melbourne is further into its downturn, and it’s possible the improved relative affordability may help cushion recent falls, with Melbourne prices falling by a small 0.1 per cent in October,” she said.
Ms Creagh said it looks likely another interest rate rise will be announced this week.
“That will certainly reinforce the downward pressure already weighing on home prices around the country,” she said.
Realestate.com.au senior economist Eleanor Creagh.
“Higher rates reduce how much prospective buyers can borrow and increase mortgage repayments and can make households just generally more cautious about taking on debt.
“The housing market is already responding to the cumulative effect of the four rate increases already delivered this year and a fifth would further constrain purchasing power.”
Another increase is also likely to weigh on buyer confidence, she said.
“We’re already seeing that caution reflected in numerous housing markets, condition metrics like softer auction clearance rates, longer selling time, and sales volumes to date this year are well down on last year’s levels,” Ms Creagh said.
“So I think another interest rate rise makes further price falls likely over the coming months, reinforcing the downturn that’s already underway, particularly in markets where affordability has deteriorated most sharply.”
Ms Creagh said units are generally holding up better than houses.
“Generally we’re seeing more affordable regions and property types are holding up better with respect to prices as borrowing capacities have been significantly reduced after the four interest rate rises this year,” she said.
“Some buyers get pushed down the price curve and reassess their property purchase in terms of making trade-offs with respect of property type or location and that means that more affordable properties can appeal to a broader range of buyers.”
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