Rate rises cut Australian homebuyers’ budgets by $100,000
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Falling property prices are offering little relief to Australian homebuyers, as rising interest rates continue to reduce borrowing power.
Canstar analysis shows three Reserve Bank rate increases this year have already cut the estimated borrowing capacity of an average-income couple by about $70,700.
If another rate rise occurs, the reduction could reach around $92,500 compared with the start of the year. For a single average-income buyer, borrowing capacity has already fallen by about $35,400 and could drop by a further $46,300.
The squeeze comes as several major cities are expected to see further house price declines.
Sydney’s median house price could fall another $67,284 by the end of 2026, with the total annual decline potentially reaching about $162,447. Melbourne could see a further $30,748 drop, while Adelaide, Brisbane and Perth could also record additional falls.
Hobart is expected to be the exception, with house prices forecast to rise slightly by the end of the year.
Experts warn that cheaper homes do not necessarily mean greater affordability. If borrowing capacity falls faster than property prices, buyers may still struggle to enter the market.
Some buyers may need to compromise on location, property size or features. Others could delay their purchase, only to find that higher interest rates reduce their borrowing power further.
Recent buyers with small deposits could also face the risk of negative equity if property values fall sharply.
However, experts say financially prepared buyers may still find opportunities in the current market. The key is having enough borrowing capacity to comfortably afford the property rather than relying solely on falling prices.
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Source : News.com
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