Almost half of all Australian properties now declining in value
Australia's real estate market is lurching towards a tipping point, with almost half of all properties now recording price falls and imminent rate rises looking likely to drive this proportion higher. View CoreLogic's interactive 'Mapping the Market' tool at the end of this article.
Around half of Australian properties are now declining in value, with the inevitability of more interest rate rises likely to put much of the other half of the market at risk of a reversal.
Sydney and Melbourne weigh most heavily on the Australian real estate market, contributing to 41.9 per cent of house and unit markets analysed in the June quarter declining in value across the country.
The latest CoreLogic Home Value Index findings are a significant increase on the first quarter of the year, when 23.6 per cent of markets recorded a fall in values.
The data released Monday (18 July) also excludes the latest of the three successive Reserve Bank of Australia (RBA) rate rises, suggesting the lurch towards more than half of national properties falling into price declines is imminent if not already a reality.
CoreLogic Economist Kaytlin Ezzy said the updated data showed a significant uptick in the proportion of declining markets compared to March, when values were falling predominantly in Sydney and Melbourne markets.
“Signs of a slowdown and falls in value were already evident before the rate rises but are now becoming more widespread across Sydney and Melbourne, and beginning to impact the more expensive areas of Brisbane, Canberra and Hobart.
“Historically, premium suburbs are more volatile than the more affordable areas, values shoot up much faster during an upturn, but are among the first to fall during a declining market.”
This observation is supported by Real Estate Institute of Victoria (REIV) data also released Monday, showing the more affordable outer Melbourne suburbs were still in positive growth territory.
REIV’s June Quarterly Median Report reveals outer Melbourne houses (20km+ from the CBD) have reached their highest-ever quarterly median price, with a 0.9 per cent increase to $856,000 (up from $848,500). Annual growth for outer Melbourne houses has grown by 12.6 per cent.
Despite climbing the median price ladder, outer suburbs are still ranking as some of most affordable spots for aspiring homeowners. Melton South ($510,575), Wyndham Vale ($580,000) and Werribee ($600,000) are among Melbourne’s most affordable pockets.
The slowdown previously seen across Melbourne’s inner east has become more widespread, with 80.0 per cent of the city’s house markets falling in value over the quarter, while almost 60 per cent of unit markets recorded a fall, Ms Ezzy said.
Regional Victoria’s medians held strong with property value increasing across houses, units and apartments.
The median house price in regional Victoria saw a 21.6 per cent annual increase from $500,000 to $608,000. Units in regional Victoria peaked to $418,000 in the June quarter reaching a new price record and shot up 14.5 per cent over the financial year.
Past their peak
The CoreLogic index showed national dwelling values declined 0.2 per cent over the June quarter, with every capital city and broad rest of state region well past their peak rate of growth.
Growth conditions across Sydney weakened significantly over the period, with house values falling 3.0 per cent. Although 81.1 per cent of house markets analysed recorded a fall in values over the three months to June, three out of four suburbs still have a median house value of more than $1 million, with no house markets under $500,000.
Ms Ezzy said due to relative affordability, Sydney’s unit market was slightly more resilient than its house market, with unit values declining 2.1 per cent over the quarter.
Almost two thirds of the Sydney unit markets analysed had a median value of between $500,000 and $1 million, while 30.6 per cent recorded a median above $1 million. Only 19 areas recorded a median value below $500,000.
“Units nationally have proven to be slightly more resilient than house markets, which largely comes down to affordability. While units in some of those more expensive inner-city areas are starting to decline nationally, fewer unit markets fell over the quarter than houses.”
Leading the charge in Metropolitan Melbourne’s unit growth is North Melbourne, rising 43.3 per cent to $666,500 (from $465,000). This was followed by Ormond, which recorded a 33.8 per cent quarterly increase to $709,000.
REIV President Richard Simpson said that while there has been discussion on the impact of interest rate rises on house prices, it was important to note that Melbourne had recorded more than 23 per cent increase in home prices over the last two years.
“The market remains strong, especially across regional Victoria.
“As expected, we saw a slight decrease in metro Melbourne as the market adapts to the current rising interest rate environment”.
|Jun-22 Quarter||Mar-22 Quarter||Quarterly Change||12 months to Jun-22||12 months to Jun-21||Annual Change|
|Unit and Apartment||$670,500||$679,000||-1.3%||$681,000||$660,000||3.2%|
|Unit and Apartment||$435,500||$423,500||2.8%||$418,000||$365,000||14.5%|
|Unit and Apartment||$650,500||$655,500||-0.8%||$660,000||$640,000||3.1%|
|Unit and Apartment||$736,000||$746,500||-1.4%||$755,000||$740,000||2.0%|
|Unit and Apartment||$631,500||$628,500||0.5%||$625,000||$590,000||5.9%|
Outside the big two
While growth conditions in Brisbane remain positive, signs of easing are evident Ms Ezzy said, with 11.6 per cent markets recording a quarterly fall in values.
Of the suburbs analysed, 120 (35.7 per cent) recorded a median house value in excess of $1 million, up from 33.2 per cent in the March quarter. Only 10 of Brisbane’s 180 unit markets declined in value over the quarter, with four suburbs in the Logan-Beaudesert region among the country’s most affordable, recording median values below $250,000.
Adelaide had the strongest quarterly growth in house values among the capitals at 5.1 per cent. Henley Beach South house values, down 1.0 per cent, was the only house market to decline during the quarter.
“Adelaide has recorded the strongest growth in the past quarter but has shown an easing in the quarterly rate of growth since February this year,” Ms Ezzy said.
“A quarter of Adelaide’s house markets are recording a median of $1 million or more, yet despite its recent growth, it also remains relatively affordable with a number of unit and house markets still recording a median of less than $500,000.”
After WA’s state border opened in March, Perth’s house values surged 2.2 per cent over the three months to June, with fewer than 20 markets recording a decline in values in the June quarter. Perth housing values remain the lowest of any capital city, but some suburbs are still recording massive annual growth around 30 per cent.
Hobart’s median house value declined -0.5 per cent to $796,863 in the June quarter with more than half the markets analysed recording quarterly falls, while only three unit markets fell in value over the same period.
In Darwin, house values increased by 3.0 per cent in the June quarter taking the city’s median value to $588,928, with only two suburbs recording a quarterly decline in house values. Unit values increased 1.0 per cent for the same period, taking the median unit value to $378,325.
Canberra’s median house value increased by 1.2 per cent in the June quarter to $1,065,317, leaving only two of the 83 suburbs analysed with a median house value less than $750,000. Although values have softened in a handful of house and unit markets in the last quarter, there have been no annual falls recorded. Canberra’s median unit value increased 2.6 per cent over the quarter to $629,531 in June.