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Australian couples earning two average wages could lose an estimated $92,500 in borrowing power after four rate rises, even as home prices fall.<\/p>\n
Falling home prices should be good news for buyers, but a brutal borrowing-power squeeze means many could still be worse off. See the cities facing the biggest falls.<\/p>\n
Australian couples each earning the average wage could have almost $100,000 wiped from their homebuying budgets this year, even as property prices fall by tens of thousands of dollars.<\/p>\n
Canstar analysis shows three RBA rate rises this year have already cut the estimated maximum borrowing capacity of such a couple by $70,700. Japanese cash rescues Melb housing market<\/a><\/p>\n Canstar Data Insights director Sally Tindall. Picture: supplied. NSW real estate<\/p>\n A fourth increase would take the reduction to $92,500 compared with the start of the year.<\/p>\n For a single buyer earning the average wage, the estimated hit has already reached $35,400 and would rise to $46,300 after another increase.<\/p>\n The figures come ahead of the RBA board\u2019s next cash rate decision on Tuesday, with another rise threatening to further squeeze how much homebuyers can borrow.<\/p>\n It creates a cruel catch for would-be homeowners hoping falling property prices will make it easier to buy.<\/p>\n NAB\u2019s latest forecasts indicate house prices could fall further between August and December in Sydney, Melbourne, Brisbane, Perth and Adelaide.<\/p>\n Canstar calculations using Cotality data show Sydney\u2019s median house price could shed another $67,284 by the end of 2026, taking it to about $1.462m.<\/p>\n That would amount to a $162,447 fall across the full calendar year.<\/p>\n NAB forecasts point to further house price falls across five major capitals before the end of 2026, including another estimated $67,284 drop in Sydney.<\/p>\n Melbourne\u2019s median house price could lose another $30,748 by December to $905,780, taking its estimated full-year fall to $89,583.<\/p>\n Adelaide could lose another $30,754 from current levels, Brisbane $28,380 and Perth $17,200.<\/p>\n But Brisbane, Perth and Adelaide would still finish the year above where they started after price growth earlier in 2026.<\/p>\n Hobart was the exception among the capitals covered by the analysis, with its median house price forecast to rise another $2095 by the end of the year.<\/p>\n Canstar.com.au data insights director Sally Tindall said falling prices did not automatically make homes more affordable.<\/p>\n \u201cFor would-be buyers, this is shaping up to be a classic case of one step forward, two steps back,\u201d Ms Tindall said.<\/p>\n Mortgage broker Imogen Alexy says some families are being forced to sacrifice bedrooms, outdoor space or location as their borrowing capacity falls.<\/p>\n \u201cThe challenge for buyers is that a cheaper price tag doesn\u2019t necessarily mean a more affordable home if your borrowing capacity has been cut at the same time.<\/p>\n \u201cAnother rate hike, should one eventuate this year, would tighten the screws even further.\u201d<\/p>\n Ms Tindall said recent buyers with little equity could also be exposed if NAB\u2019s forecasts were realised.<\/p>\n \u201cIf NAB\u2019s forecast plays out across house prices, estimates show a median-priced house in Sydney could fall by more than $160,000 over the 12 months to December this year,\u201d she said.<\/p>\n \u201cThat\u2019s a tough pill to swallow for homeowners who bought at the peak with next to no buffer. Negative equity is a very real prospect for these borrowers.\u201d<\/p>\n Frame Finance director and mortgage broker Imogen Alexy said buyers were increasingly splitting into two camps as borrowing capacity fell.<\/p>\n Property Investment Professionals of Australia chair Cate Bakos says falling prices favour buyers only when they still have enough borrowing capacity to act.<\/p>\n \u201cThere\u2019s a really big divide,\u201d Ms Alexy said.<\/p>\n She said losing $70,000-$90,000 in borrowing power could mean staying in a preferred area but sacrificing a bedroom, outdoor space or overall home size, or moving further away to find something affordable.<\/p>\n \u201cEither way, you have to be prepared to make a sacrifice,\u201d she said.<\/p>\n Ms Alexy said some buyers who could comfortably afford their preferred type of property six months ago could no longer do so.<\/p>\n Others were delaying purchases in the hope prices would fall further, but another rate rise could leave them with less borrowing power despite having saved a larger deposit.<\/p>\n She said some people who spent another six to 12 months accumulating savings were returning to brokers to discover higher rates had effectively wiped out the benefit.<\/p>\n \u201cAll of those savings are essentially nullified and they\u2019re back to square one,\u201d Ms Alexy said.<\/p>\n \u201cThat\u2019s a really tough conversation to have.\u201d<\/p>\n Canstar estimates three rate rises have already cut an average-income couple\u2019s maximum borrowing capacity by $70,700, with another hike taking the hit to $92,500.<\/p>\n Property Investment Professionals of Australia chair Cate Bakos said first-home buyers were not automatically better off simply because property values were falling.<\/p>\n \u201cIf borrowing capacity falls at a faster rate than house prices are falling, then obviously the outcome for a buyer is negative,\u201d Ms Bakos said.<\/p>\n She said buyers with stronger incomes and enough serviceability to comfortably secure the loan they needed were better placed to take advantage of weaker prices.<\/p>\n Others could be pushed from houses into units or forced to search further from major cities as their budgets contracted.<\/p>\n Ms Bakos said recent low-deposit buyers should not necessarily panic about falling valuations if they planned to remain in their homes.<\/p>\n \u201cNegative equity only bites if you crystallise a loss,\u201d she said.<\/p>\n \u201cIf they\u2019re making a decision to sell, then obviously that will be a blow for them, but it doesn\u2019t really matter what your property\u2019s worth if it\u2019s just a value on paper and you\u2019re staying put.\u201d<\/p>\n Despite the gloomy outlook, Ms Bakos warned buyers with the financial capacity to purchase against waiting indefinitely for prices to fall further.<\/p>\n \u201cIf you\u2019ve got the capacity to buy a property that\u2019s right for you now, standing back and adopting a wait-and-see approach is not what I\u2019d recommend,\u201d she said.<\/p>\n \u201cWe\u2019re going to have a recovery and people will be sad that they\u2019ve missed the boat.\u201d<\/p>\n She said current conditions could favour purchasers, but only those financially capable of acting on them.<\/p>\n \u201cIt\u2019s a buyer\u2019s market, but you can only take advantage of it if you\u2019ve got the capacity to move forward,\u201d Ms Bakos said.<\/p>\n Sign up to the Herald Sun Weekly Real Estate Update. Click here <\/a>to get the latest Victorian property market news delivered direct to your inbox.<\/p>\n MORE: Melb couple\u2019s \u2018nerdy\u2019 trick to save money<\/a>Critical error will ruin Block stars<\/a><\/p>\n
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