What happens when house prices fall? Canada and New Zealand offer some clues
Australia's property market is facing potential decline as interest rates hit 15-year highs and consumer confidence remains low. By comparing current trends to Canada and New Zealand, analysts are evaluating whether Australia will experience a similar housing correction.
Why it matters
Understanding housing market trajectories helps homeowners, investors, and policymakers anticipate economic shifts and potential financial instability.
While that may seem like good news for first homebuyers, higher interest rates have done little to improve housing affordability so far. Four rate hikes this year have cut borrowing capacity by about 9 per cent, or $90,000, for a median-income household, according to data analytics company Cotality. Homeowners and renters are also under pressure. According to Roy Morgan research, more than 32 per cent of borrowers are now at risk of mortgage stress — up 8.4 percentage points since January — while the rental market remains tight. The major banks and analysts are predicting a decline of between 7 and 15 per cent, while United States investment bank Morgan Stanley has forecast the biggest price correction in 40 years . The broader economic backdrop is also weighing on households.
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