Interest rate hikes a body blow to Aussies’ purchasing power
House prices have only just become unaffordable this year, a new analysis suggests, with interest rate hikes slashing more than 20 per cent from the purchasing power of the average prospective buyer.
Deutsche Bank Australia economist Phil O’Donaghoe calculated that in April, a buyer could afford to buy a house for $508,000.
Since then — with seven successive interest rate hikes from May pushing the cash rate up to 2.85 per cent — the average buyer could only afford a $398,000 purchase — a 22 per cent decline.
Using only interest rates and income to determine affordability, Mr O’Donaghoe mapped actual house prices to affordable house prices since 1983.