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Australian house prices: 300 suburbs that have significantly dropped in value

Australian house prices: 300 suburbs that have significantly dropped in value

As skyrocketing interest rates smash the Australian housing market, a dozen suburbs have already seen property prices fall by more than $500,000 since March.

PropTrack’s automated valuation model (AVM) data show more than 300 suburbs across the country where dwelling values ​​have experienced six-figure falls over the quarter.

In percentage terms, the worst-performing suburb in the country was South Hedland in WA’s Pilbara region, where units dropped by 24.81 per cent to a median value of $213,791 in June 2022 – a loss of more than $70,000.

That was closely followed by Booval in Queensland, where unit prices were down 24.64 per cent, or more than $121,000, to $370,231.

But it was wealthy suburbs in the capital cities that experienced the largest falls in dollar terms, with parts of Sydney’s northern beaches and eastern suburbs, Melbourne’s Mornington Peninsula, as well as inner-city Perth and Canberra all experiencing falls in excess of half a million dollars.

Former Prime Minister Malcolm Turnbull’s eastern suburbs home of Point Piper recorded the biggest fall in dollar terms, with units there losing nearly $715,000 in value – a 14.82 per cent fall from $4.82 million to $4.11 million.

Manly came in second place with losses of nearly $680,000 in house prices, representing a 13.8 per cent fall from $4.92 million to $4.25 million.

Ingleside on Sydney’s northern beaches saw house prices fall nearly $610,000 to $2.77 million, while Flinders in Melbourne suffered a $600,000 fall to $2.51 million.

Other suburbs where house prices fell by more than $500,000 include Clontarf, Dover Heights, North Bondi, Bronte, Rose Bay and Bondi Beach in Sydney, Peppermint Grove in Perth and Griffith in Canberra.

Close behind in the $400,000 range were the likes of Double Bay and Tamarama in Sydney, Red Hill – both in Victoria and Canberra – and Mulgoa at the foot of the Blue Mountains.

“Price falls are largely being led by the ‘high end’ of the market and higher value suburbs,” said PropTrack senior economist Eleanor Creagh.

“Manly and Tamarama in Sydney have all posted declines in quarterly values.

“Previously popular suburbs in the Central Coast and Melbourne’s Mornington Peninsula have also seen values ​​decline.

“It’s often the case that the upper end of the market experiences larger price declines, and at the moment it’s the suburbs that are home to more expensive properties that are seeing bigger price falls than more affordable properties.”

It’s not all bad news for homeowners, however.

House prices in some suburbs are still rising, led by Balmain East in Sydney’s inner west, which saw house prices rise more than $329,000 over the quarter to $3.48 million.

New Farm in Brisbane was second with house price growth of more than $295,000 to $2.65 million, followed by Coledale in NSW’s Illawarra region, which was up nearly $289,000 to $2.47 million.

Other suburbs where dwelling values ​​rose more than $200,000 were Newcastle East, The Rocks and Waterloo in Sydney, and Brisbane’s Bowen Hills, Tenerife, Highgate Hill and West End.

“While the current cycle of exceptional price growth is winding down Australia-wide, there are some parts of the country bucking the falling price trend,” said Ms Creagh.

“Parts of Brisbane, Adelaide and regional Australia are proving more resilient.

“With the pandemic driving a boom in remote working, housing markets in parts of regional Australia have emerged, with sea and tree changers looking for lifestyle locations, larger homes, and beachside living.”

The ongoing low supply of properties available for sale, combined with relative affordability advantages driving heightened demand, are causing prices to continue to rise in some regional areas or only just beginning to fail as the impact of higher interest rates weighs on the market.

“As the home price cycle has matured and interest rates are now rising, some suburbs in previous regional hot spots on the Sunshine Coast, and in the Southern Highlands and Geelong regions are starting to see larger price falls, with affordability advantages having been eroded since the pandemic onset,” Ms Creagh said.

“Suburbs like Lorne, Sunshine Beach, Minyama and Noosa Heads have all seen quarterly declines in unit or house values.”

She added it was a similar picture in the capital cities, with markets that led the upswing like the “lifestyle and coastal locations of the northern beaches and eastern suburbs now seeing larger price falls”.

It comes after the Reserve Bank hiked interest rates for the fourth month in a row on Tuesday.

The 50 basis-point increase at the central bank’s August meeting brings the official cash rate to 1.85 per cent, up from the record low 0.1 per cent it was up until May.

Governor Philip Lowe said the RBA had made the decision to raise the rates in a bid to drive down the current 6.1 per cent inflation figure.

In a statement, he said the path to returning to inflation under 3 per cent while keeping the economy on an even keel was something that would take time.

“The path to achieve this is a narrow one and clouded in uncertainty, not least because of global developments,” Dr Lowe said.

“The outlook for global economic growth has been downgraded due to pressures on real incomes from higher inflation, the tightening of monetary policy in most countries, Russia’s invasion of Ukraine, and the Covid containment measures in China. Today’s increase … is a further step in the normalization of monetary conditions in Australia.”

Already, the rise in interest rates has pushed house prices down in most major cities as borrowers stare down the barrel of higher monthly payments.

PropTrack’s Home Price Index shows a national decline of 1.66 per cent in prices since March, but some regions have seen much sharper falls.

“As repayments become more expensive with rising interest rates, housing affordability will decline, prices pushing further down,” Ms Creagh said earlier this week.

Last week, the Australia Institute’s chief economist, Richard Dennis, told NCA NewsWire the RBA was one of the biggest threats to the economy at the moment.

“If we keep increasing interest rates because inflation is higher than we’d like, we might cause a recession,” he said.

“Increasing interest rates won’t help us prepare for a slowing global economy … but they might actually further dampen the Australian economy.”

[email protected]

– with NCA NewsWire

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RBA interest rates: Westpac decreases fixed rates as three big banks pass on full 0.50 percentage point rate hike

RBA interest rates: Westpac decreases fixed rates as three big banks pass on full 0.50 percentage point rate hike

Westpac Bank has made a surprising move, choosing to spare some customers from escalating price hike pain.

The big bank has announced it will be decreasing its four-year owner occupied fixed interest rate by one per cent, down to 4.99.

Westpac is the third of the big banks to announce its rate changes following the Reserve Bank of Australia’s decision to increase the official cash rate by 0.50% per annum (pa) on Tuesday.

The big bank has unsurprisingly followed its rivals the Commonwealth Bank and ANZ in increasing its variable home loan interest rates.

The interest rate changes will come into effect for new and existing home loan variable rate products on Thursday, August 18.

Earlier today, ANZ joined CBA in announcing it will be passing on the hike to variable rate mortgages and one savings account by the full 0.50 percentage points.

The major bank said its up-scaled up mortgage rates will come into effect for both new and existing customers from Friday, August 12.

The lowest variable rate will now be increased to 3.69 per cent – ​​just under that of CBA, which pumped up its lowest rate to 3.79 per cent.

Both rates are at three-year highs.

The ANZ decision also included increasing the rate on its new ANZ Plus Save account by 0.50 percentage points to 2.50 per cent for balances up to $250,000, which will come into place on Monday.

The move came just hours after Australia’s biggest bank, the Commonwealth Bank, announced it will pass on the full 0.50 percentage point hike to its variable home loan customers and some savings customers.

CBA will bring its occupier principal and interest standard variable home loans rate to 5.8 per cent.

Uncharacteristically, Australia’s other big banks have been slow off the blocks following the RBA’s decision on Tuesday, with CBA’s competitors Westpac, NAB and ANZ yet to make their announcements.

Mortgage rates for new and existing customers at CBA will rise by 0.50 percentage points on August 12, with investor rates rising to 6.38 per cent.

Research director at RateCity.com.au Sally Tindall said while the CBA’s decision comes as no surprise, for customers who are already feeling the heat, this fourth hike is a “difficult pill to swallow”.

“From next week, CBA’s basic variable rate will hit a three-year high of 3.79 per cent – ​​a huge increase from three months ago when it was just 2.19 per cent,” she said.

For an owner-occupier with $500,000 debt and 25 years remaining, the 0.5 percentage point hike means they will see their monthly repayments rise by $140.

To ease the strain, Commonwealth Bank is cutting its lowest four-year fixed rate to 4.99 per cent – ​​a drop of 1.60 percentage points.

This special rate, which comes into play on Friday, is strictly for owner-occupiers paying principal and interest on a package rate ($395 annual fee) for a limited time.

While Ms Tindall said the “whopping cut” will make it the lowest in its category, she warned it may not necessarily be a good idea.

“People should think carefully about whether they want to lock up their mortgage for the next four years because there can be significant consequences if they decide to break their loan,” she said.

For those with a NetBank Saver account, who will see the full rate hike, the research director said an ongoing rate of just 0.85 still won’t cut it.

“In this market, where we could see ongoing rates over 3 per cent, these savers are still getting paid peanuts,” she said.

But Ms Tindall said there are signs things could be turning around.

“On Tuesday, Macquarie announced it was making significant cuts to its fixed rates and now CBA is following suit,” she said.

“We expect this will trigger further fixed rate cuts from other lenders in response to both evolving market expectations and competition among the banks.”

Read related topics:westpac

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Commonwealth Bank is first major bank to lift interest rates, two days after RBA rates decision

Commonwealth Bank is first major bank to lift interest rates, two days after RBA rates decision

After two days of silence, Commonwealth Bank has finally confirmed it will lift interest rates on its variable mortgages by 0.5 percentage points.

This makes CBA the first of the “big four” banks to pass on the Reserve Bank’s latest rate hike.

The RBA lifted its cash rate target by 0.5 percentage points on Tuesday, taking the new rate to a six-year high of 1.85 per cent.

It was no surprise that the commercial banks would pass on the RBA’s rate increase to their borrowers.

However, the surprising aspect is how uncharacteristically slow the banks have been in making such announcements in the past couple of days.

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Reserve Bank hikes interest rates for fourth consecutive month(Rhiana Witson)

CBA’s main rivals — Westpac, NAB and ANZ — still haven’t provided any update on their new borrowing rates.

Australia’s fifth-largest lender, Macquarie Bank, was the first bank to lift its rates — within hours of the RBA’s decision on Tuesday.

This was followed on Wednesday by ubank — an NAB subsidiary — announcing it would lift its savings rates by 0.5 percentage points in September.

Delay in being the first mover

“This kind of waiting game is unusual, but not unprecedented,” said Sally Tindall, the research director of RateCity.

“Back in 2010, three of the big four banks took between eight and 10 days to make announcements following the 0.25 percentage point RBA hike on 2 November.”

“The delay could be a worrying sign for savers. It’s possible the banks are still mulling over whether they will pass on the full hike to all their savings customers.”

“However, the big four banks could just be playing a game of chicken to see which one of them moves first.”

CBA increased its the standard variable rates for its borrowers by 0.5 percentage points.

The bank also said it would increase the rate on “select savings products”, meaning it has not passed on the RBA’s full rate hike to all savers.

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Interest rates: Peter White urges borrowers to beware of the hidden dangers associated with refinancing following RBA rate rise

Interest rates: Peter White urges borrowers to beware of the hidden dangers associated with refinancing following RBA rate rise

A leading loans expert is urging mortgage holders to be wary of the hidden dangers associated with refinancing as the big four banks look to entice more customers with “cheap deals” following this month’s rate rise.

Peter White AM, the managing director of the Financial Brokers Association of Australia (FBAA), is asking Australians who are considering whether they should switch up their home loan to proceed with caution, warning that “cheaper isn’t always better”.

The director’s message comes after the Reserve Bank of Australia increased the cash rate by 50 basis points for the fourth time in as many months on Tuesday.

With the base rate now standing at 1.85 per cent, Mr White is asking borrowers to be on alert as major banks look to lure vulnerable customers who are struggling with their repayments to sign up to its services.

“Some banks at the moment are offering cheap variable rates to new borrowers only. This is a trap,” Mr White told news.com.au.

“For the lender it’s about using a marketing budget to generate more customers, knowing that most customers will stay as it costs to change again.”

It’s all part of a “vicious cycle” lenders use to draw customers into borrowing from them, Mr White explained, where new customers are blindsided as the rate on offer doesn’t always mean the customer will be better off in the long term.

“There is a hidden danger at times like this that is rarely spoken about,” Mr White said.

“Banks will be looking to attract those considering refinancing as new customers, and will offer cheaper variable interest rates that are significantly below their fixed rates, which are rapidly climbing. This is a case of ‘buyer beware’.”

Cashbacks and exclusive rates at discount prices for new customers are some of the lures banks are using to attract new borrowers.

Both come at the cost of disadvantaging the lender’s current customer base as their higher interest rates make up for the lower rate offered to new customers.

“Borrowers should be aware that next time around they will be the existing customer facing higher rates and will be disadvantaged during rate increases,” Mr White said.

“It’s an old game to lure new customers with a perceived advantage only to be taken advantage of with the next move.”

Additionally, some banks use a tactic where they attempt to give you a better rate after you’ve agreed to another offer.

“If they were serious about looking after you they would have offered this when you first approached them, so ignore this offer and don’t be distracted as this will cause you even more headaches, and makes the process even more complex,” he said .

While Mr White advises borrowers to refinance with caution, saving on your home loan isn’t entirely off the cards.

Rather than focusing on the big four banks, Mr White recommends looking at what second tier banks such as Suncorp, and non-banks such as Bluestone, have on offer.

“Going with the major banks is often the most expensive way forward and may not be in your best interests due to constraints and other factors specific to you,” Mr White said.

“Remember the big banks can only sell you their products, and their aim is to look after themselves and their shareholders, not to act in your best interests.”

It’s also advised that borrowers go through a mortgage broker, rather than directly through a bank. Brokers are free to use as they receive commission from lenders once they sign a customer up to a service.

They also have access to a range of offers that aren’t always available to borrowers who go through the back directly and can find a rate and repayment schedule that suits a borrower’s needs.

“A finance broker is obliged to act in your best interests and sometimes this means explaining that the best option may be not to refinance,” Mr White said. “(They’re also) charged by law to act in your best interests, whereas banks are not.”

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CBA responds to RBA interest rate hike, ANZ, NAB, Westpac stay silent

CBA responds to RBA interest rate hike, ANZ, NAB, Westpac stay silent

Australia’s largest bank has finally responded to the interest rate rise two days after it was initially announced.

On Thursday morning, the Commonwealth Bank of Australia revealed it will pass the full cost of the rate hike onto customers.

The Reserve Bank of Australia (RBA) hiked interest rates on Tuesday for the fourth consecutive month.

Australia’s central bank increased the interest rate by 50 basis points, or by 0.5 per cent, bringing the cash rate from 1.35 per cent to 1.85 per cent, largely in line with economist’s predictions.

Up until now Australia’s biggest four banks — The Commonwealth Bank (CBA), ANZ, NAB and Westpac — hadn’t made any changes in response to the latest rate hike.

But just before 10am, the CBA said variable home loans would increase by 0.5 per cent per year from August 12 while term deposits would kick in with the higher return from August 8.

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The CBA’s variable mortgages as well as term deposit accounts and its NetBank Saver accounts will be impacted by the change.

Owner occupiers and investors on variable rate home loans will have to fork out an extra 0.5 per cent in interest every year.

Term deposits and CBA’s savings account will also increase by 0.5 per cent/

The new term deposit rate will be available from 8 August, while the new NetBank Saver rate will take effect on August 12 along with home loans.

Group Executive, Retail Banking, Angus Sullivan, said: “We have been helping customers understand the changing rate environment and consider what it means for them, and we will continue to be there for them.”

Since May, the cash rate has risen by 1.75 percentage points, after four months of back-to-back increases by the central bank.

However, the CBA is so far the only one of the big players to respond, and that was nearly 48 hours later.

In stark contrast, within hours of the announcement, a smaller bank, Macquarie Bank passed on the rate rise almost straight away.

Macquarie Bank was the first bank to say it would increase variable mortgage rates by 0.5 per cent by August 12.

Rates on its savings and everyday transaction accounts also increased by 0.50 per cent.

The move impacts the estimated 2 million people who are customers of Macquarie Bank.

However, CBA, ANZ, NAB and Westpac have between 8.5 million to 17 million customers each, according to Statista.

Last month, Westpac gave customers the most amount of time to prepare for a change in its variable mortgages and also its savings rates, taking two weeks for the change to come into effect – although it announced the change within 24 hours.

The other three banks passed the change onto customers within 10 days after a swift response.

The August hike isn’t expected to be the last, with economists forecasting that interest rates could peak up to two per cent by the end of the year.

Tuesday’s rate rise means those paying off the average home loan of $500,000 will need to cough up an extra $140 a month.

Tuesday’s decision marks the first time the RBA has lifted the rates for four months in a row since the introduction of the two to three per cent inflation target in 1990 in a sign of the inflation and cost of living crisis across the country.

This follows last week’s increase in annual inflation, which hit 6.1 per cent, which was its highest level in 21 years since 2001.

Tuesday’s rate rise means those paying off the average home loan of $500,000 will need to cough up an extra $140 a month.

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Home prices in ‘affordable’ regional Queensland towns continue to rise as national housing market drops

Man and woman smiling in front of their weatherboard home painted blue and cream, near a tree.

A 25-year-old buying a two-storey house with a picturesque garden for just over $300,000 harks back to the early 1990s.

But in outback Queensland towns such as Longreach, it’s the norm.

The Reserve Bank of Australia yesterday raised interest rates for the fourth consecutive month, but Longreach resident Ben Galea said he was not stressed.

“When it comes time for my fixed interest rate to change … I don’t have to change my lifestyle,” Mr Galea said.

“It’s a great town. It’s buzzing. There are a lot of young people here. There are lots to do, lots of sports. It’s brilliant.

“There are things that we don’t have out here. It costs money to fly back to the coast. You don’t see family as often. These are the things you give up.”

As interest rates rise, home values ​​in Australia are dropping at their fastest pace since the global financial crisis, with the latest data showing that the nation’s median property value has dropped by 2 per cent since the beginning of May, to $747,182.

Lush green backyard with smoke rising from a pizza oven.
Mr Galea purchased his home last year for $310,000 at a “beautiful” fixed rate of 1.9 per cent.(Supplied)

But parts of regional Queensland are tipped to be more insulated from price drops than cities, and some regions have continued to see property prices increase in the last month.

Regional Australia Institute chief executive Liz Ritchie said it was mostly due to housing affordability in the regions.

“What we won’t see is the markets in regional Australia and regional Queensland fall as sharply,” she said.

“In the past couple of years, regions have seen significant price growth… but this is off years of just having steady incremental growth.

“The shocks that we’re seeing with interest rate hikes just won’t be felt in the same way, particularly in Queensland’s more rural and remote communities.”

Regional buyers ‘not overly worried’

Toowoomba-based Heritage Bank’s chief operating officer Dan Dredge said recent hikes to interest rates had not affected the number of people applying for home loans in regional Queensland through his bank.

Young man lighting a fire with a circle of friends.
Mr Galea says he loves the lifestyle and community in western Queensland.(ABC Western Qld: Victoria Pengilley)

“We’re not seeing people being overly worried about interest rate rises,” Mr Dredge said.

“What we’re seeing is people budgeting and setting their expectations on higher interest rates, moving forward.”

Data from CoreLogic found dwelling values ​​in regional Queensland fell by 0.8 per cent in July, compared to larger falls of 2.2 per cent in Sydney and 1.5 per cent in Melbourne.

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Reserve Bank raises interest rates for fourth-straight month

Reserve Bank raises interest rates for fourth-straight month

The Reserve Bank has increased interest rates for the fourth month in a row, raising its cash rate target by half a percentage point.

The RBA has now lifted its benchmark interest rate by 1.75 percentage points since its first rate rise in May, with the cash rate target sitting at 1.85 per cent.

In his post-meeting statement, Reserve Bank Governor Philip Lowe said the latest rate rise was unlikely to be the last this year.

“The board expects to take further steps in the process of normalizing monetary conditions over the months ahead, but it is not on a pre-set path,” he said.

“The size and timing of future interest rate increases will be guided by the incoming data and the board’s assessment of the outlook for inflation and the labor market.

“The board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time.”

Woman in suit stands in front of Westpac corporate signage
Besa Deda is the chief economist for St George Bank and Westpac Business Bank.(ABC News: Daniel Irvine)

St George Bank chief economist Besa Deda said the Reserve Bank had already raised rates faster than any time since 1994, but she expected more.

“We think their cash rate could have a 3-handle on it by the end of this year, because inflation is running at its fastest rate since the early 1990s,” she told The Business.

“We are expecting that the Reserve Bank will deliver rate hikes for every board meeting until February next year.”

‘Real risk’ of recession

Mr Lowe acknowledged that it would be a difficult task.

“The board places a high priority on the return of inflation to the 2-3 per cent range over time, while keeping the economy on an even keel,” he warned.

“The path to achieve this balance is a narrow one and clouded in uncertainty, not least because of global developments.”

The managing director of EQ Economics and former ANZ Bank chief economist, Warren Hogan, warned that a recession was a “real risk” if the Reserve Bank raised interest rates too fast.

“I think they just need to be patient with this tightening cycle and try and get this inflation under control over a couple of years, rather than rush it and try and get it done within a year,” he cautioned.

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Melbourne single mum struggling to pay extra $360 a month after RBA interest hike

Melbourne single mum struggling to pay extra $360 a month after RBA interest hike

A single mum’s “dream” of becoming a homeowner has become more like a nightmare as she struggles to survive amid the rising cost of living.

Jodi Cameron, 40, from Melbourne, currently has nothing in her bank account after building her house cost more than expected. She can’t even afford to complete the house, with her driveway unfinished because she ran out of cash.

On Tuesday afternoon, she was hit with more bad news; the Reserve Bank of Australia had increased interest rates again, for the fourth month in a row.

It means the single mum, with two daughters aged four and eight, must now fork out an extra $140 every month to pay back her mortgage.

In total, since the central bank started increasing interest rates in May, the family is now paying back an extra $360 a month — money it desperately needs.

“It’s just horrible,” Ms Cameron told news.com.au.

“I do find myself in a situation where paying rent and a mortgage and daycare fees, there’s nothing left.”

Currently, her savings account stands at $0, she said.

The mum worked throughout the Covid pandemic as a disability support worker and blames her current predicament on one thing — missing out on a government grant.

She had factored in receiving a $15,000 grant to help her build her own home but missed out, leaving her financially wrecked.

“I just wanted to own my own home,” Ms Cameron explained.

“It’s just disgusting, it’s so frustrating, I work my guts out, all I wanted was the great Australian dream.”

Her variable interest rate has gone up from 2.79 per cent to 4.5 per cent in the past three months, and is set to go up even further after the rate hike on Tuesday.

“I’m not on a fixed mortgage, I don’t know how I’m going to do it,” Ms Cameron said.

“I’m probably going to have to pull my [youngest] daughter out of daycare because I can’t afford daycare. That also means, how am I meant to work from home with a child?”

As a single mum with no family to fall back on, Ms Cameron had resigned herself to renting but in 2020, she was given hope that she might be able to break into the property market.

The federal government announced the HomeBuilder grant scheme in a bid to increase the disruption to the economy and the building sector during Covids, where eligible homeowners received $15,000 to form part of the payment for a building project for their primary residence.

Ms Cameron met all the criteria for the grant so bought a $263,000 block of land in Lang Lang, a regional town southeast of Melbourne, in August 2020 in the hopes of setting herself up financially for the future.

“I got on the low deposit scheme, I didn’t need a massive deposit,” she explained.

Then in March the following year, she signed a build contract which cost $300,000 for a four-bedroom, two-bathroom home.

She only needed a 5 per cent down payment for the land and the build contracts and was expecting the extra $15,000 from the grant to provide a helpful buffer to afford the progress payments.

But then she logged back onto the HomeBuilder online portal and was devastated to discover she had missed a key due date — which her broker and bank had never mentioned to her.

“I missed a portal cut off date that was never shown or advertised anywhere,” Ms Cameron lamented.

As a result, she was not able to be part of the scheme.

Near the end of her build, the mum ran out of funds and couldn’t afford to pay for a driveway.

“I’ve got no driveway, it’s just mud, I can’t afford it, it’s not nice to have that money you relied on ripped away from you,” she added.

“I owe the real estate the last month’s rent which I can’t pay.

“I assumed I would have this $15,000 to help me out, I don’t have it. This grant meant a lot.”

The mum is now waiting with bated breath as the Reserve Bank is expected to keep hiking interest rates till the end of the year.

[email protected]

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Interest rates: RBA raises cash rate by 50 basis points to 1.85 per cent

Interest rates: RBA raises cash rate by 50 basis points to 1.85 per cent

For the fourth consecutive month the Reserve Bank of Australia (RBA) has hiked interest rates as inflation runs rampant.

At 2.30pm during the RBA’s monthly meeting, it increased Australia’s interest rate by 50 basis points, or by 0.5 per cent.

The decision brought the cash rate from 1.35 per cent to 1.85 per cent, largely in line with economist’s predictions.

This marks the first time the RBA has lifted the rates for four months in a row since the introduction of the two to three per cent inflation target in 1990.

This follows last week’s increase in annual inflation, which hit 6.1 per cent, which was its highest level in 21 years since 2001.

Tuesday’s rate rise means those paying off the average home loan of $500,000 will need to cough up an extra $140 a month.

And the August hike isn’t expected to be the last, with economists forecasting that interest rates could peak up to two per cent by the end of the year.

As soon as news of the interest rate rise broke, Treasurer Jim Chalmers weighed in and acknowledged it was a tough time for Australian borrowers, saying the announcement would “sting”.

“It’s another difficult day for Australian homeowners with a mortgage,” he said.

“The independent ReserveBank has just announced its decision to increase interest rates by another 0.5 per cent, bringing the cash rate to 1.85 per cent.

“Australians knew this was coming, but it won’t make it any easier for them to handle.

This cycle of interest rate rises began before the election in response to inflationary pressures that began accelerating at the beginning of this year.

“Average homeowners with a $330,000 outstanding balance will have to find about $90 a month more for repayments as a consequence of this decision today, on top of around $220 extra in repayments since early May.

“For Australians with a $500,000 mortgage, it’s about an extra $140 a month, in addition to the extra $335 they’ve had to find since early May.

“As I said, Mr Speaker, this decision doesn’t come as a surprise. It’s not a shock to anybody, but it will still sting.

“Families will now have to make more hard decisions about how to balance the household budget in the face of other pressures like higher grocery prices and higher power prices and the costs of other essentials.”

‘Misleading’: Calls for bank boss to resign

Ahead of the interest rate rise, there were growing calls for the RBA’s board and its governor, Philip Lowe, to resign after a series of missteps.

Chief among them was the promise that interest rates wouldn’t rise until 2024 which one top economist said was “misleading” for borrowers.

Critics also pointed out that the rapid rate rises could inadvertently lead to a recession while at the same time inflation is running rampant.

Warren Hogan, chief economist at both ANZ and Credit Suisse, told The Daily Telegraph that the RBA was guilty of some “pretty bad errors” in recent months.

The RBA lowered the cash rate to 0.1 per cent at the end of 2020 amid the Covid-19 pandemic – the lowest it had ever been – and throughout the pandemic said they didn’t plan on raising the cash rates until 2024.

When it lifted the cash rate for the first time in May and then every month since, Mr Hogan said it was “misleading people, basically”.

He also said Australia’s central bank had taken on risky strategies including spending lots on insurance and sinking funds into a bonds program which had not paid off.

Mr Hogan, who was also the former principal adviser to federal treasury, said: “It’s unforgivable. I think they should resign – the whole board.”

Mr Lowe “should have the character to stand down,” Mr Hogan added.

RELATED: Find out how much the rate rise will cost you

Mr Lowe said the cash rate would remain at its record low of 0.1 per cent until at least 2024, but the rapid rise in inflation this year – caused in part by Russia’s war in Ukraine and supply chain issues on home soil – prompted the monthly hikes .

It comes as Australia’s cost of living crisis is worsening, making borrowers even more cash-strapped than usual.

In the last quarter, transport costs rose 13.1 per cent as the price of fuel rose to record levels for the fourth quarter in a row.

Meanwhile, grocery shopping is also causing hip pocket pain, with Australians outraged to find lettuce heads selling for $10 a pop and capsicums marked at $15 for a kilo.

Interest rates in Australia reached an all time high of 17.5 per cent in January 1990. Since then, they have averaged 3.93 per cent.

Before this year, the last time the RBA hiked up rates was in 2010. It has only been going down ever since.

As a result, more than one million home borrowers have never experienced an increase in mortgage rates, because they bought a home after 2010.

The official cash rate has been at a record low of 0.1 per cent since November 2020 in response to the Covid-19 pandemic until May 2022.

– with NCA NewsWire

Read related topics:Reserve Bank

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Rental properties Australia: How much rent has increased in your suburb

Rental properties Australia: How much rent has increased in your suburb

Renters are suffering from “ridiculous” rent hikes due to a chronic housing shortage, as city-dwellers flood regional markets and landlords flip rental properties to short-term housing to accommodate an influx of tourists.

Suburb-level analysis collected by PropTrack exclusively for The Oz revealed Killcare Heights on the central coast of NSW experienced the greatest rent increase over the past 12 months at 72.6 per cent, followed by Rainbow Beach on Queensland’s south coast (72.5 per cent) and Stahan in western Tasmania (68.4 per cent).

Killcare Ray White agent Sue Rallis said some local properties have risen from $700 to $1500 a week since the pandemic began, due to Sydneysiders making the most of a Covid-induced at-home lifestyle and moving into regional areas.

“People are happy to come out of the cities and move regionally, which has pushed up the rent over the last year or two,” she said.

“It’s been hard for the locals. They have been living in an area that a lot of people didn’t want to live in, and have been paying quite low rents there over the years. Now it’s very difficult for the locals to afford some of the rents.”

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Median weekly rental prices in June were up 7 per cent on the same month last year, marking the strongest annual rental growth recorded since before 2015. Rising prices have been felt the most regionally, where they increased 11.4 per cent year-on-year to June, compared to 4.4 per cent in the capital cities.

This came as the total supply of rentals dropped 27.7 per cent below its decade average.

PropTrack director of economic research Cameron Kusher said a devastating lack of supply has driven prices upwards, as fewer owners put their second properties up for rent.

“A lot of people who have bought quote unquote ‘investment properties’ aren’t necessarily buying them to make them available for rent, they’re buying them as second homes,” he said. “You’ve also got the added pressure now that domestic and international travel is back that the supply of rental stock is spinning out because people are putting their properties into short term rental accommodation, rather than long term.”

Mr Kusher said rental growth in inner-city areas has been “pretty weak” over the past two years as tenants stayed put, but has suddenly increased over the past six months after long term lockdowns ended.

“We have seen again in Sydney and Melbourne in those inner and middle ring markets in the apartment markets in particular, it has been very hard to rent out a property over the last few years,” he said.

“So, a lot of people sold out of their investment properties, and we haven’t seen a lot of developers building new one and two bedroom apartments. Therefore, we haven’t had that increase in supply we needed to keep up with demand.”

When renewing her lease last month, Leane Van Essen’s landlord requested the rent go from $450 to $550 a week for a one-bedroom apartment in North Sydney.

Unable to afford the “ridiculous” 22 per cent increase, the 29-year-old was given 60 days to find a new apartment.

“I had to find a new place super quickly, but then I got Covid and couldn’t go look at apartments, which was incredibly stressful,” she said. “They kept calling me, trying to rush me out, even though I still had my 60 days.”

Eventually, Ms Van Essen was forced to find a stranger online to move in with, settling in a two-bedroom apartment in Sydney’s inner-city suburb of Mascot for $750 a week.

Similarly, Ellen Mezger, 25, was asked to bump up her rent for a two-bedder in Sydney’s Waterloo from $620 to $800 a week when her lease expired this month.

She said “a lot of sacrifices”, including giving up her gym membership, would have to be made if the rent increased that much.

Kusher said it would be a while before rent costs dropped again as landlords feel the increasing burden of skyrocketing interest rates, and pass them onto their tenants.

“Landlords will be trying to pass on as much of those increased costs as they can to their renters, so that’s something that renters are going to be facing,” he said.

“Obviously, for renters, there’s quite a lot of incentives to try and buy your first home. The government’s got a Shared Equity scheme, they’ve got a low deposit scheme in NSW from January next year, you’re going to be given the option to pay land tax as opposed to stamp duty. At some point, people will look at it and go, you know, I can be slugged with higher rates every six months, or maybe it’s time to take up one or two of these schemes and buy.”

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