Property prices nationally fell by 0.1 per cent in May,the first monthly drop since September 2020. Median house values in Sydney and Melbourne have both fallen by 1.3 per cent over the quarter.
Despite these falls,the median house price in Sydney is at $1.4 million while in Melbourne it is now $992,000. The average new mortgage in NSW is now at $800,000 while in Victoria it is $650,000.
Moody’s said that in May,Australian households with two incomes needed 26.8 per cent of their monthly income to meet the repayments on a new mortgage loan. In January,they required 25.7 per cent.
There are large differences across capital city markets. The least affordable is Sydney,where households needed 37 per cent of their income to make their loan repayments. In Melbourne they needed 29.8 per cent while in Perth they required just 16.3 per cent.
Repayment levels in all capitals except Perth are now above their 10-year average.
According to Moody’s analysts,affordability will not improve even as house prices fall because increasing interest rates will drive up mortgage repayments.
“We expect housing prices to decline over the rest of this year and into 2023 as rising interest rates
weigh on property market sentiment,” they said.