Editorial: Christmas nightmare for middle Australia

The safest money on Melbourne Cup day is on a rate rise. You can almost bet your house on that.

The Reserve Bank of Australia is widely tipped to lift interest rates for a second straight meeting on Melbourne Cup day, which would mark five upward movements in a row in a further blow to Australia’s falling housing market.

On top of that, latest house price data from property analyst Cotality shows Perth home prices fell $16,000 in October alone and are now falling faster than just about anywhere else in the nation.

In fact, Perth median property prices are down nearly $100,000 since their peak value six months ago, with the nation’s mid-sized capitals now experiencing the pain Sydney and Melbourne markets have been through.

“Virtually every suburb across Brisbane, Perth and Adelaide has recorded a drop in values over the past three months,” was the ominous message from Cotality’s Tim Lawless to start November.

It is far from the end of the world for longtime home owners, who are still well in front financially.

But it is notable that the speed of decline in home values across major cities is tracking at the fastest pace in more than 40 years.

And that is a disaster for any young couple drawn into our overheated market in recent times — often using Anthony Albanese’s divisive 5 per cent deposit plan.

A housing price bloodbath is not what such homeowners want to hear the day before the cost of their mortgage repayments are set to soar yet again.

The market had already priced in an 85 per cent probability of a hike to the cash rate on Tuesday. It will be another painful hit for households already struggling under severe economic pressure.

And this week’s housing announcements are sure to create more problems for the Prime Minister, whose government is already on the nose and desperately trying to battle the feverish support for rising political power One Nation.

Mr Albanese will no doubt point the finger at the RBA and interest rates for the housing situation.

But clearly the downturn is linked to Mr Albanese’s attack on capital gains tax and negative gearing in this year’s controversial Federal Budget.

Those changes were sold as a way to put downward pressure on property prices.

This, they claimed, would help young and first-homebuyers into a market they feared had passed their generation by. Noble idea but afailure in the real world.

Those rushed policy decisions of mid-May have already had a much larger effect than intended as investors retreat completely from the market.

And is that any surprise, given those changes were made without consultation?

Only after beleaguered Treasurer Jim Chalmers nailed his colours to the mast in this year’s Budget was there opportunity and effort to paper over the cracks in his reform plan.

A Federal Budget, it must be said, which remains unpassed more than five months on, as the Parliament continues to work through all of its dire consequences.

Responsibility for the editorial comment is taken by WAN Editor-in-Chief Christopher Dore