Housing downturn is accelerating, finds CoreLogic

New data from property data and analytics business CoreLogic has found that national property prices were down 1.6 per cent over the month of August, the largest month-on-month decline since 1983.

The figure marked the fourth month in a row in which property values have fallen.

Sydney continued to lead the downswing, with values falling 2.3 per cent over the month. Values in the NSW capital have dropped the most of any capital recently – falling 5.9 per cent over the past three months and now 2.5 per cent down on an annual basis.

Overall, property values in the combined capitals fell 1.6 per cent in August.

Brisbane saw prices fall by 1.8 per cent in August, followed by Hobart and Canberra (both down 1.7 per cent) and then Melbourne (down 1.2 per cent).

Perth and Adelaide both saw prices drop marginally (0.2 per cent and 0.1 per cent respectively), leaving Darwin the only capital city not to experience a house price downturn in August (up 0.9 per cent).

CoreLogic’s research director Tim Lawless noted that Brisbane’s shift into decline had been “acute”, after nearly two years of sustained growth due to record-high internal migration and relative affordability.  

“It was only two months ago that the Brisbane housing market peaked after recording a 42.7 per cent boom in values,” he said. 

“Over the past two months, the market has reversed sharply with values down 1.8 per cent in August after a 0.8 per cent drop in July.”

However, on an annual basis, Brisbane property values remain 17.5 per cent higher than last year, with Adelaide values having risen 21.8 per cent in the past 12 months.

Regions also starting to see values fall

The CoreLogic figures also showed that the regions have been experiencing a downturn after a bumper few years. Indeed, while regional dwelling values surged more than 40 per cent between March 2020 and the beginning of this year, they were down 1.5 per cent in August. 

“The largest falls in regional home values are emanating from the commutable lifestyle hubs where housing values had surged prior to the recent rate hikes,” Mr Lawless said. 

Only seven regional areas analysed recorded a rise in housing values in August — with the northern suburbs of Adelaide leading the way at (0.9 per cent).

CoreLogic’s latest Home Value Index showed despite the falls — the total annual change in national housing values was still up 4.7 per cent by the end of August — with the combined capitals up 2.2 per cent and combined regional areas up 13.4 per cent on last year.

Moreover, values remain well above pre-COVID levels in all capital cities and rest-of-state regions, bar Melbourne. 

Mr Lawless said he expects the downturn will continue to play out through the remainder of the year, and possibly into 2023.  

“It’s hard to see housing prices stabilising until interest rates find a ceiling and consumer sentiment starts to improve,” he said. 

“From current levels, interest rates are likely to increase by at least another 75 basis points and there is a good chance advertised stock levels will accumulate through the spring selling season, providing more choice for buyers and adding further downwards pressure on housing values.”

Moreover, the CoreLogic research director said that the silver lining to lower house prices was improved mortgage affordability.

“The wash up is that lower housing prices and higher incomes should make home ownerships more achievable for non-home owners, but headwinds remain in being able to save for a deposit and demonstrate the ability to service a loan amid such a high cost of living,” he said.

[Related: Younger Australians flock to regions]