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July 2022 Australian Housing Market Trends

Learn what’s new in the Australian property market as of July 2022 with latest performance and expert insights.

Inflation and the cash rate

Earlier this month, the Reserve Bank of Australia (RBA) announced another 0.5 per cent increase to the cash rate (bringing it to 1.35 per cent). With inflation high, the Bank believes that increasing the cash rate will encourage lenders to increase their interest rates. This move is believed to be necessary to “help establish a more sustainable balance between the demand for and the supply of goods and services.”

On Wednesday, the Reserve Bank declared that the inflation rate has risen 6.1%. Thus, making it the fastest annual increase to the rate of inflation in Australia in over two decades. As a point of reference, the RBA sets a target of 2-3% for the inflation rate.

In Wednesday’s media conference, treasurer, Jim Chalmers, said “inflation will get worse before it gets better.” He added that inflation will peak by the end of 2022 to around 7.75%. Despite this negative outlook, it’s believed the inflation rate will decrease to 3 per cent, again, by June next year.

The RBA influence banks and their decisions surrounding interest rates
The RBA influence banks and their decisions surrounding interest rates

What does this mean for interest rates?

As costs to everyday living items and services rise, so will home loan rates. It’s expected that the RBA’s cash rate will exceed 2% by the end of the year. Major lenders are expected to follow in pursuit by increasing their interest rates to loan products.

Unless you’ve fixed your home loan, variable rates will continue to rise in coming months. Major lenders tend to follow in pursuit of the Reserve Bank. As interest rates rise, so will the mortgage repayments.

Property and finance experts are stressing the importance of being well prepared to cope with mortgage rises and the increase to costs of living. You can learn about some of our favourite tips for staying ahead of inflation in our blog, here.

Australian property market prices to slow

It’s believed that Australian property prices reached their peak in March. Since then, house prices have fallen by 0.5%. The most significant falls have occurred in Sydney and Melbourne property markets. The decrease to property prices has been slower in Brisbane, Darwin, and Canberra.

A new report by has stated that “nationally, we are forecasting prices to fall by between -2% and -5% by the end of this year and by a further -7% to -10% by the end of next year.” While property prices are expected to fall, the decrease won’t outpace the average gains of between 20-30% experienced in the property market boom during COVID.

The graph, below, demonstrates forecasts to property prices across the capitals by December 2022 and December 2023.

Rental market

Median rents are 7% higher compared to the June 2021 Quarter. Combined capital city house rents are averaging $500 a week and $50 less for units. In regional locations, rentals for houses are $455 and $395 for units. Speaking about the rental crisis, Cameron Kusher (PropTrack Chief Economist) has stated that the total supply of rental properties is down 18% from a year ago.

Additionally, rental prices are anticipated to increase further. This comes as migration intensifies within Australia, combined with the already low national vacancy rate (which currently sits at 1%). The Federal Government has indicated they want to fill labour shortages, and this will be done through increasing migration.

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