Rising interest rates weigh on median home prices: HTW

The Reserve Bank of Australia’s sharp tightening cycle has started to see median home prices fall across the country, according to the latest Herron Todd White (HTW) Month in Review.

In the October report, HTW National Director, Group Risk and Compliance, Kevin Brogan said the locations that saw the largest boom throughout 2020 and 2021 are now the ones that are seeing the most downward pressure on median home prices.

“The more recent impact of increasing interest rates has therefore had a pronounced drop in the median dwelling price,” Mr Brogan said.

According to Mr Brogan, areas that buyers can still afford are still seeing demand.

“In more affordable regional areas, the recent strength of the market has been attributable in part to out-of-area purchasers who have viewed residential property as affordable,” he said.

“In these areas, there has still been a recent fall in median prices, but it has been far less abrupt than in higher value urban areas.”

Mr Brogan said some of the smaller capital city markets are still holding up well.

“Of the state capital cities, Adelaide remains relatively affordable and as such has retained almost all of the value increases that occurred before the current round of interest rate increases,” he said.

“And to prove that variety is the spice of life, Darwin dares to be different and is the only market that is yet to see any fall in the median dwelling price.”

Unit prices are also faring better than houses, Mr Brogan said.

“In a high-value capital city such as Sydney, the affordability constraints associated with buying a house can encourage potential purchasers to consider buying a unit and this demand can mitigate a potential decline in the median unit price,” he said.

Source: HTW


HTW Director Shaun Thomas said the median price across Sydney at the end of August, according to CoreLogic, was $1,302,635 for houses and $799,150 for units, with both down 2.5 per cent compared to a year ago.

“Current market conditions across Sydney’s inner city are soft, with agents reporting lower numbers of (and often more hesitant) buyers, largely as a result of interest rate uncertainty and negative sentiment,” Mr Thomas said.

“This is causing the market to cool from the highs experienced in 2021 and is therefore presenting some good buying opportunities for those who have the cash flow to sustain their investments during this period of rising interest rates. 

“Good buying is particularly evident within the apartment market where some investors are looking at selling due to diminishing returns from mortgage rate increases. 

“South-west Sydney remains one of the few enduring places in the Sydney basin where a typical family home could still be purchased sub-$1 million.”

Source: HTW


HTW Director Perron King said across the state of Victoria, property values are down 3.4 per cent since the February peak, with house values down 4.1 per cent and unit values falling by 2.1 per cent.

He said many inner ring homes should hold their value and continue to attract demand due to unique design features and proximity to amenities.

“The quality of housing within the middle ring has increased dramatically in recent years due to the spike in home renovations and new home constructions,” Mr King said.

“Investment options requiring major renovations or new builds would be considered poor in current market conditions due to the cost of materials, lag times and bleak economic outlook.

“Suburbs on the outer fringe of Melbourne’s east are likely to experience major growth in the coming years as hubs are formed and urban sprawl continues. 

“Once the economic outlook clears and purchaser confidence rises, these areas will be of great interest.”


HTW Director David Notley said the median price sits at approximately $850,000 for houses and $500,000 for units which places the city top of mind for homeowners and investors whether they be local, interstate or those soon-to-arrive overseas buyers.

“Brisbane has a range of options for buyers at these median prices,” Mr Notley said.

“While some locations and property types might experience softer conditions as we head towards the end of the year, there’s also a confidence that a long-term approach to ownership will deliver plenty of value upside.

There is relatively good buying to be had in the unit space at present, Mr Notley said.

“Our city’s plummeting vacancy rate and rising rents are attracting investor interest on the back of excellent returns,” he said.

“We’d expect a $500,000 two-bed unit to rent for $550 to $575 per week, reflecting a very healthy gross yield of 5.7 to six per cent. 

“For owner-occupiers in particular, the relative affordability of units in these prime locations versus the cost of houses is proving attractive to the market.

“Most property commentators feel there’s still some decent value growth to be seen in this market too.”


HTW Property Valuer Nick Smerdon said on the back of RBA cash rate rises, the heat appears to now be coming out of the market with the June quarter of 2022 having the lowest growth rate since the corresponding quarter of 2020.

“Within the inner ring, buying at the median dwelling price can be difficult with many of the suburbs with close proximity to the CBD having median dwelling values in excess of $1 million,” Mr Smerdon said.

“The middle ring brings greater affordability with traditional detached dwellings, newer infill development and development sites becoming available at the $650,000 price point.

“Moving to the outer ring, it’s a tale of north and south, with each having significantly different market dynamics.

“The outer north has historically been a hunting ground for investors with gross yields in excess of 6 per cent common.”


HTW Director Chris Hinchliffe said rising interest rates is starting to weigh on confidence in the housing market, however, some areas are holding up well.

“Some northern suburbs on the western side of the Mitchell Freeway have experienced strong annual growth rates ranging from 10 to 40 per cent and offer a quantity of properties for the median house price,” Mr Hinchliffe said.

“The outer-northern coastal suburb of Alkimos is very popular with buyers, with the suburb offering a median house price of $452,500 and experiencing 10 per cent capital growth.

“North Perth in particular is an interesting point of discussion. 

“The suburb has now joined the $1 million club in terms of median price, illustrating its growth potential and status as an investor’s paradise.”


HTW Valuer Cameron McDonell said with no suburbs reaching a median house value of over $1 million, Darwin remains relatively affordable in comparison to other capital cities.

“Comparatively, values have not fluctuated as drastically as those in other capitals, highlighted by the negative turn of values in Sydney and Melbourne,” Mr McDonell said.

“As a result of the steady maintained growth over the past two years, the Darwin market in many ways has fewer risks to buyers than Sydney or Melbourne. 

“Darwin house values increased by 3 per cent in the June quarter, taking Darwin’s median house value to $589,000. 

“Median unit values also increased in the June quarter to $378,000, showing a 1 per cent increase.”


HTW Assistant Property Valuer Kush Sen said the median house price for Canberra, according to the Domain House Price Report, put Canberra’s median house price at $1,134,678 for the December 2021 quarter.

“When looking at a year-on-year price in June 2021, the median house price was $1,015,833 which was an annual increase of 14.3 per cent,” Mr Sen said.

“When looking at the current market and what is predicted to occur, we can see that there has been a slight pullback from the peak of the market earlier in the year however the market is starting to stabilise and the interest rate hikes are set to slow down as well. 

“Buyers are now being attracted to properties considered to be affordable to live in. 

“If you are still looking to buy or are waiting for the property market to pull back a bit, the stabilisation of the market will mean that we will be turning to a more normal market than what we have been seeing recently.”

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.