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101 Australian suburbs average homebuyer will lose after rate rise
A decision to hike interest rates by Reserve Bank governor Michelle Bullock could squeeze homebuyers out of more than 100 Aussie suburbs and towns.
Australia’s average homebuyer is facing a 101 suburb wipeout on where they can afford a house if the Reserve Bank hikes interest rates on Tuesday.
One rate cut is enough to wipe about $20,000 from the borrowing power of the nation’s typical homebuying household, taking them from being able to afford homes with $877,000 down to homes maxing out around $858,000.
Analysis of impacts to borrowing capacities also shows that a second rate hike before the end of the year could leave those borrowers who can afford the nation’s average loan struggling to get a home worth $840,000 and at risk of no longer being able to access 236 areas around the nation that they can afford today.
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Has the RBA already wiped out the home ownership gains from tax changes?
The dream of home ownership is getting even more distant for many young Australians. (ABC News: John Gunn)
A rate rise is estimated to cause an immediate 5 per cent reduction in home purchases.
Economic modelling suggests the home ownership rate would fall by 0.3 of a percentage point and take more than a decade to recover.
Markets and economists are almost certain the RBA will announce a rate rise on Tuesday.
Each standard interest rate increase could be locking close to 30,000 households out of home ownership, some of them for more than a decade, research suggests.
The modelling was conducted by James Graham, a senior lecturer in economics at the University of Sydney, along with Avish Sharma, a PhD candidate at Northwestern University who is a former analyst at the Reserve Bank of Australia.
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