How Some Australian cities’ home prices are falling by roughly $1,000 per day, and every capital city in the nation is declining.
Since March 2020, home prices have soared due to record-low loan rates.
However, the RBA began increasing interest rates in May to combat rising inflation.
The latest Home Value Index indicates that combined capital city prices decreased by 1.6% in August, causing homeowners to feel the pinch.
The impact of interest rate hikes on home values is undeniable, with property prices falling in practically every Australian region and every big city except Darwin.
Thursday’s release of CoreLogic’s latest national Home Value Index revealed a fourth consecutive month of falling prices, with the median property price in Australia’s capital cities falling 1.6% in August.
Sydney values decreased the most during the month, down 2.3% to a median value of $1.3 million. Since April, consecutive monthly decreases have shaved $114,000 off the median price, or $927 each day.
Melbourne property values decreased 1.5% in August and 4.4% since April, a decline of $51,000 or $415 per day.
According to CoreLogic’s most recent Home Value Index, the median home price in the harbour city declined 2.3% in August.
Corelogic data indicates all capitals save for Darwin are experiencing a decline in home prices.
Brisbane, which had previously defied the declining trend, also experienced a decline in August, catching up with the southern capitals.
Despite this, it has increased 18.1% during the past year.
‘Only two months earlier, the Brisbane home market peaked after experiencing a 42.7% value increase. The market has reversed drastically over the previous two months, with values falling 1.8% in August after falling 0.8% in July, according to Tim Lawless of Corelogic.
Adelaide, Perth, Hobart, and Canberra, which had also previously resisted price declines, had declines in August, bringing all capitals except for Darwin into a decline.
Two years of internal migration drove up home values in rural centers as city inhabitants sought a sea or tree change, but the decline now appears to have spread beyond the nation’s capitals.
Between March 2020 and January 2022, rural home prices increased by more than 40%, compared to a growth of only 25.5% for the combined capitals.
Melbourne, the capital of Victoria, had a 1.5 percent dip in home values for August.
In August, regional home values decreased by 1.5%, roughly identical to the 1.6% decline in combined capital values.
Mr. Lawless stated that the largest declines in regional property values are occurring in commutable lifestyle areas where housing values had soared previous to the recent rate hikes.
In the past three months, property values have decreased by 8% in the Richmond-Tweed market, 4.8% in the Southern Highlands-Shoalhaven region, and 4.5% on Queensland’s Sunshine Coast.
Only seven of the 41 regions examined by CoreLogic saw an increase in home values in August.
This includes the northern suburbs of Adelaide at 0.9%, the north east of Perth and Mandurah at 0.6% and 0.5%, and the Coffs Harbour-Grafton region at 0.6%.
Mr. Lawless stated that the annual pattern of growing home values is rapidly leveling down.
After reaching a peak annual growth rate of 21,3% in November of the previous year, the annual growth rate for the combined capitals has decreased to 2.2%.
August saw a decrease in Brisbane home prices, but the year-over-year increase was still 18%.
Sydney’s annual values were down 2.5% while Melbourne’s were down 2.1% from the previous year.
Nevertheless, the slump has had a negligible impact on the general increase in housing values over the Covid period.
Since March 2020, prices in Sydney increased by 27.7 percent and have since decreased by 7.4 percent.
While in Melbourne, they increased by 17.3% and have since decreased by 4.6%.
ABS data obtained by insurance company Budget Direct and released this week indicate the median housing price in Australia increased by 23,7% between 2020 and 2021, the largest annual increase in a decade.
ABS data obtained by insurance Budget Direct indicate a considerable increase in Australian housing prices between 2020 and 2021.
The research indicated that the median home price in Australia increased to just over $900,000 in 2021, from just over $700,000 in 2020.
This one-year increase of $200,000 was equivalent to the median price increase from 2012 to 2020, which increased from $500,000 to $700,000.
Mr. Lawless anticipates that the recession will persist through the balance of the year and even into 2023.
It is unlikely that housing prices would stabilize until interest rates reach a maximum and consumer mood improves, he said.
‘From current levels, interest rates are likely to rise by at least another 75 basis points, and there is a good likelihood that advertised stock levels will grow during the spring selling season, giving purchasers more options and exerting additional downward pressure on home values.’
Over the past year, the median value of a home in Perth has increased by 4.9% to $561,781.
Since May, when the Australian central bank raised interest rates for the first time in twelve years, the official cash rate has increased by 1.75 percentage points.
Tuesday’s RBA board meeting is anticipated to result in another half-percentage-point rate cut, according to the markets.
PERCENTAGE OF VALUE CHANGE
SYDNEY -2.3% for August and -2.5% for the entire year. $1,066,493 median
-1.2 for August and -2.1 for the year for MELBOURNE. $782,053 median
CANBERRA -1.7 in August and 7.8 annually. $909, 748 median
BRISBANE -1.8 for the month of August and 17.5 for the year. $762,284 median
ADELAIDE -0.1 for the month of August and 21.8 for the year. $652, 959 median
PERTH -0.2 in August and 4.9 over the past year. $561,781 median
-1.7 for the month of August and 5.8 for the year. $714,370 median
DARWIN 0.9 for August and 6.3 for the entire year. $512,531 median
Corelogic Home Value Index published on September 1st, 2022