The Reserve Bank of Australia’s seven rate hikes in the last 20 months are finally starting to negatively impact the property market.
New data from the Real Estate Institute of Australia found both house and other dwelling median prices decreased by 2.5 per cent to $532,695 and 1.8 per cent to $422,947 respectively over the March 2011 quarter.
“This represents a deceleration in property prices after a period of solid growth in previous quarters. We are witnessing the impact on prices of increases in cash rates during the second half of last year, rises in the cost of living have restrained household spending and the natural disasters in Queensland have also significantly affected the property market,” REIA president David Airey said.
With the exception of Sydney and Adelaide, all Australian capital cities recorded median house price decreases over the quarter. Sydney, Melbourne and Darwin recorded the highest median house prices, while the lowest were recorded in Hobart, Adelaide and Brisbane.
“Melbourne house prices recorded the largest drop over the quarter, down 6.0 per cent to $565,000. The largest increase in median prices was evident in Sydney, up 1.1 per cent to $637,258,” Mr Airey said.
“In summary, we are seeing a softening of the housing market explained by economic factors, not a bubble starting to burst.”