A rise in interest rates is threatening home construction across Australia, realestate.com.au reported on Friday, describing the move as a "nail in the coffin" for the country's builders.
The report sits alongside a broader property downturn. According to The Guardian, prices are falling in almost every capital city in Australia. The Australian Financial Review reported that one Sydney suburb has taken a $1 million hit to prices as the slump deepens, while ABC News reported that homeowners in Western Sydney are "battening down the hatches."
The pressure on borrowers is also intensifying. The Australian reported that mortgage repayments now absorb a larger share of wages than they did during the 1990 interest rate peak, describing the situation as "never been more painful."
Taken together, the reports point to stress on both sides of the housing market. Builders face a rate environment that realestate.com.au says endangers new home projects, while existing owners confront falling values and repayments that are consuming a record portion of their income.
The source material does not specify the size of the rate increase, the lender or body responsible, or the suburbs and price figures behind the individual reports. It also does not give a timeline for the falls beyond the publication date.
What to watch next: whether further rate movements follow, and how they affect building activity and prices in the months ahead.
