This time last year we were starting to feel the pinch of expected interest rate rises. What wasn’t expected, however, was the inherent stickiness of inflation and the subsequent outcome of 12 increases in interest rates in just over a year.
Consumers have had to find their feet and come to terms with not only an increased cost of debt but also a higher cost-of-living more generally. These new economic conditions and their effect on consumer sentiment has led to a reduction in residential property prices in most markets of around 10 per cent. Volume has been down approximately 20 per cent on the prior year.
On a positive note, there was a clear turning point in the market around Easter this year. With a belief that interest rates were approaching their peak, and with clear evidence prices had stabilised, buyers have expressed an increasing and strong demand for quality property.
Median property prices in Melbourne