‘It’s quite distressing’: rate rise brings new pain for would-be homebuyers

The Reserve Bank’s third consecutive rate hike is tightening borrowing capacity and worsening affordability for Australian first‑time buyers. While headline dwelling prices in Sydney and Melbourne are down modestly (0.6% in April; three‑month falls of 0.9% in NSW and 1.5% in Victoria), entry‑level stock (cheapest 25%) is still rising (Melbourne +0.5%, Sydney +1.5% in April), partly due to a government deposit guarantee. Higher rates shave roughly A$17,000 off a typical first‑home buyer’s borrowing limit per hike (average borrowed ~A$607,000), so reduced capacity may outweigh any small price falls. Regional divergence is stark: Perth values are up ~9.2% year‑to‑date while some capitals may see further small declines. Overall, the RBA move is increasing downside pressure on affordability and household budgets, particularly for renters converting savings into deposits.