Rate rises push house values lower across Melbourne, except in one suburb

Kalkallo was the only Melbourne suburb where house values had not fallen since interest rates began to rise.Unit values held up better than houses as buyers sought a cheaper alternative further from the city.Rising interest rates have pushed house values lower in every Melbourne suburb analysed, except for one that is defying gravity five months since the first hike, new figures show.

CoreLogic research analyst Kaitlyn Ezzy said house values in the cheaper end of the Melbourne market had held up better than in expensive inner-city suburbs. That included first-home buyer areas in Melbourne’s outer west, north-west and north-east where house values were only down slightly since the first interest rate rise in May.

“The level of [debt] that Australia has currently means that rate rises have had a much stronger impact,” she said. “Even in 1994, when rates rose by a similar amount, the level of household debt was significantly lower.”more in repayments than in May. The hikes have dented demand for new loans, which fell another 3.4 per cent in August after an 8.5 per cent drop in July, ABS figures showed.

“If there are four people at an open [house], all four of them are ready to buy, they’re not wasting time, they’re serious.” Commonwealth Bank’s head of Australian economics, Gareth Aird, said though values were up in some suburbs, the shifts that had started at the top end of town would spread across the market over time.

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