The unwanted Christmas gift homeowners were expecting


The Reserve Bank of Australia’s decision to lift the cash rate for the eighth consecutive time this year (up 25 basis points to 3.10 per cent) is unlikely to surprise mortgage holders who have been budgeting for the increase, according to the LJ Hooker Group.

The announcement comes at a time when the pace of price declines in both metropolitan and regional markets continued to slow down.

Just three months ago, Sydney property values had declined by 2.3 per cent but more recently had fallen by 1.3 per cent. In Perth, property prices were stable from October to November, while values increased by 0.2 per cent in Perth, latest CoreLogic data shows.

LJ Hooker Group’s Head of Research, Mathew Tiller, said listings remain tight with the expectation that the market will bottom out soon. The number of homes for sale is down 30 per cent from this time last year; while the number of transactions has also declined by 23 per cent.

“These figures show us that vendors are being more cautious than buyers in the current market,” Mr Tiller said.

“There is always a base level of those who have to sell whether it is due to personal reasons but we are also seeing some people list their property in order to downsize their mortgage. These are people who have purchased prior to the pandemic and with equity in their property - they are able to reduce repayments by moving to somewhere more affordable.”

Early signs are showing higher interest rates are having an impact on the economy and inflation may have peaked.

First-home buyer activity in NSW has picked up in recent weeks with the ability to defer stamp duty; investors are also back, however, they are constrained by the serviceability of loans and how much they can borrow.

Mr Tiller believes the RBA’s current cycle cash rate increases may finish during the first quarter of 2023. This will see buyers who have been sitting on the sidelines begin to jump into the market before any upswing in property prices.

Those considering selling should start preparing their homes over the summer break and importantly have their home appraised.

“It is not one homogeneous market in Australia, there are a lot of individual markets and every suburb performs differently - vendors need an understanding of what is happening in their particular area,” Mr Tiller said.

“The best results are being achieved for homes in a good location, priced well and well-marketed. Look at what can be done to make your property more appealing to buyers and seek advice from the experts.” 

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