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Interest rate rises and fears of a slowing economy dull buyers’ appetites for homes.

The median price for a detached home in Melbourne in the March quarter was $432,500, a slide of 8.4% from the December quarter median of $472,250.

The sharp fall will raise the hopes of many people who have been locked out of the housing market in the nation’s housing affordability crisis.

The National Australia Bank yesterday lifted its variable mortgage interest rates by 0.1 percentage points, raising its standard variable home loan rate to 9.46%. On Thursday, the ANZ bank decided to raise rates by 0.1 percentage points.

Real estate agents and property experts had tipped a cooler market this year after Melbourne’s median price surged 23.4% in 2007 to $485,000.

The Reserve Bank’s decision to lift official interest rates four times since August, combined with higher petrol and food prices, has capped consumer spending power.

“There is some nervousness among consumers and many are waiting to see more stable conditions in terms of interest rates,” said Chris Lamont, chief executive of policy at the Housing Industry Association of Australia.

“Certainly you are seeing properties and transactions not at 2007 or 2006 levels, and it’s fair to say that with existing housing stock it’s going to be a fairly cautious road for the next three to six months.” .. .more

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