‘It’s quite distressing’: rate rise brings new pain for would-be homebuyers

The third Reserve Bank rate hike in a row has delivered a blow not only to mortgaged homeowners, but also to those hoping to break into the property market like Dani Hunterford and her husband. They have been saving for a deposit but have been left frustrated as another rate hike appears to put their homeowning dream out of reach again. “It feels quite distressing to be honest with you,” she said. Climbing interest rates generally weigh on property prices as prospective buyers factor in higher borrowing costs and the central bank works to slow the economy. Home values in Sydney and Melbourne since late last year have been sliding from their record highs as prospective buyers began to factor in the chance of higher interest rates. Dwelling prices in the NSW and Victorian capitals were 0.6% down in April, and 0.9% and 1.5% lower, respectively over three months. But Gerard Burg, head of research at Cotality, said even these small glimmers of improving affordability for first home buyers were illusory as falling values have been at the most expensive end of the market. “There has been weakness in Sydney and Melbourne property prices, but from a first home buyer perspective it hasn’t been in the markets that benefit them,” Burg said. In particular, the cheapest 25% of properties – where most first-time buyers would be looking – are still climbing in the two east coast capitals, by 0.5% in Melbourne and 1.5% in Sydney in April. …