According to CoreLogic’s latest Property Pulse report, national home values have fallen by 2.9 per cent in the year ending June 2018 in real terms (including inflation), compared to a 0.8 of a percentage point decline in nominal terms.
The report reveals that over the same period, combined capital city home values fell by 3.6 per cent in real terms, compared to 1.6 per cent when analysed in nominal terms.
Darwin home prices dropped by 9.6 per cent (7.1 per cent nominally), Sydney values fell by 6.5 per cent (4.5 per cent nominally) and Perth prices declined by 3.1 per cent (2.1 per cent nominally).
Further, when assessed in nominal terms, values in Melbourne, Brisbane and Adelaide increased in the year to June 2019 by 1.0 per cent, 1.1 per cent and 1.1 per cent, respectively. However, in real terms, all three capitals reported falls of 1.0 per cent.
Price growth in Hobart and Canberra was also softer in real terms. Hobart’s home values rose by 10.4 per cent in the 12 months to June (12.7 per cent nominally), and Canberra’s prices increased by 0.2 of a percentage point (2.4 per cent nominally).
Reflecting on previous trends, CoreLogic’s research analyst, Cameron Kusher, observed that it is unlikely that “real” home values would return to their peak any time soon, particularly in Sydney and Melbourne where the housing market slump has been most prevalent.
“In previous downturns for Sydney and Melbourne, real value declines have been large and they have taken a long time to eclipse their previous peaks,” the research analyst said.
“After real dwelling values peaked in Sydney in December 2003, they fell by 18.4 per cent to December 2008 and didn’t eclipse their previous peak until June 2014.
“In Melbourne, real dwelling values peaked in June 1989 and fell by 24.3 per cent to December 1995 and didn’t eclipse their June 1989 peak until September 1999.”
Mr Kusher continued: “Value declines in the two largest cities are a relatively new occurrence, and given it is occurring from a backdrop of significant increases over recent years, it could be many years before we see real dwelling values returning to their previous peak.
“Especially when other external factors are considered such as tightened credit accessibility, potentially higher mortgage rates and historic low rental returns as well as the potential for changes to the tax treatment of investment housing.”
Moreover, the report noted that in the decade to June 2018, national home prices increased by 16.7 per cent, 27.2 per cent lower than the 43.9 per cent growth recorded in nominal terms.
Over the same period, combined capital city prices rose by 23.8 per cent in real terms, compared to growth of 52.6 per cent in nominal terms.