SYDNEY, Australia: Amidst rising interest rates and a cost-of-living crisis, Australian home prices declined for the third month in July, with Sydney suffering its worst decline in almost 40 years.

Figures from property consultant CoreLogic released this week showed that home prices around the country fell 1.3 percent in July from June, when they dropped 0.6 percent, but were still 8.0 percent higher for the year, reflecting the gains made over 2021 and early 2022.

While annual growth slowed to 5.4 percent from above 20 percent early this year, the weakness was concentrated in major cities where prices fell 1.4 percent in July.

In Sydney, prices dropped 2.2 percent in the month, while Melbourne lost 1.5 percent.

"Although the housing market is only three months into a decline, the national Home Value Index shows that the rate of decline is comparable with the onset of the global financial crisis in 2008, and the sharp downswing of the early 1980s," said Tim Lawless, CoreLogic's research director, as quoted by Reuters.

Brisbane also recorded a fall of 0.8 percent, while in Canberra this was 1.1 percent, and in Hobart it was 1.5 percent.

The retreat partly reflects higher borrowing costs, as the Reserve Bank of Australia lifted rates for three consecutive months and will likely hike rates again this week, in a bid to curb inflation.

Major banks have also raised borrowing costs on new fixed-rate mortgages and tightened lending standards.

The current 1.35 percent cash rate could reach 3.40 percent by the middle of next year, as predicted by markets.