The value of residential real estate now sits at $9.5 trillion as of October, down from the $10.2 trillion reported by the ABS back in June. 

This comes as residential property prices fell for the sixth consecutive month in October, recording a 1.2% decline nationally. 

Housing remains the primary source of Australia’s wealth according to CoreLogic, with 57.8% of all household wealth held in housing.

In the three months to October, CoreLogic’s national home values fell 4.1% with Brisbane, Sydney and Canberra leading the declining trend across capital cities.

CoreLogic revealed Brisbane values fell 5.4% over the course of three months, with Sydney trailing closely behind at 5.3% and Canberra at 4.3%.  

In the regions, regional NSW led the trend of declines with a 5.0% drop in values over the three months to October. 

PropTrack Senior Economist Eleanor Creagh noted it’s often the case that the upper end of the market experiences larger price declines.

“At the moment it’s the regions and suburbs home to more expensive properties that are seeing bigger price falls,” Ms Creagh said. 

“The Richmond Tweed region (in NSW) has seen prices fall the furthest from peak at 6.3%.”

CoreLogic Economist Kaytlin Ezzy noted it is unsurprising the Richmond-Tweed region recorded the strongest decline in housing values. 

“Throughout the COVID period, values skyrocketed, rising more than 50% and taking the median house value to more than $1.1 million,” Ms Ezzy said. 

“However the impact of this year’s floods, coupled with seven consecutive rate rises, has seen house values fall in the region by nearly -16% since April.”

See Also: September 2021 - How Brisbane became Australia's property darling

Dwindling appetite for new home loans

CoreLogic revealed Australians have amassed $2.1 trillion of outstanding mortgage debt as of October 2022. 

Despite this figure, Aussies are showing a reluctance to purchase properties and take on new finance as a result of interest rate hikes and cost of living pressures, with CoreLogic highlighting the value of new housing finance fell 22.4% compared to its recent May peak. 

CoreLogic Research Director Tim Lawless said if November’s cash rate increase is passed on in full to mortgage rates, the average variable mortgage rate for a new owner occupier loan is set to reach approximately 4.96%, up from the April low of 2.41%.

“The cumulative 2.75% rise through the tightening cycle since May takes home loan rates above the 2.5% serviceability buffer and close to the current 3% serviceability buffer,” Mr Lawless said.

For reference, the serviceability buffer is a calculation of a floor rate, plus a buffer, designed to ensure borrowers can still repay their home loan amid economic shocks or interest rate rises.

See more: What is a serviceability buffer and how does it impact me? 

APRA lifted the serviceability buffer for new home loans in October last year from 2.5% to 3.0%, following a surge in the number of Aussies taking on jumbo-sized debts more than six-times their income.  

Mr Lawless noted November’s rate hike may leave some recent borrowers approaching uncharted waters with regards to their ability to service their loan.

“(This is) a situation made harder due to persistently high cost of living pressures that were unlikely to be factors at the time of origination,” he said.

Founder of Two Red Shoes Rebecca Jarrett-Dalton noted alongside the serviceability buffer increase, there are additional factors at play that may hamper serviceability. 

“We have had movement in the mandatory minimum living expenses that banks use,” Ms Jarrett-Dalton told the Savings Tip Jar podcast. 

“This is a fallback position. If you advise a lender that your living expenses are for example below average, the lender relies on a benchmark known as the household expenditure measure.” 

See more: What is the Household Expenditure Measure? 


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Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
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Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Image by Ben Mack via Pexels 





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