More than one way to measure property value movements
There is another way to measure what is happening with housing values and this involves a price estimate across all dwellings, not just that those that have sold during a fixed period.
Most of the time – well almost always – when you hear about a change in dwelling values it reflects prices achieved at sale.
Homeowners often misinterpret what this means to them.
Many think, that, if say – the median value of dwelling sales fell by say 5 per cent over the past 12 months (for example) - that their home is worth 5 per cent less.
Yet, over the past twelve months there were about 490,000 dwelling sales across the country, which represents a turnover of about 4.5 per cent of Australia’s dwelling stock. That totalled just over 11 million homes.
On average – over the past decade – about 5 per cent of Australia’s dwellings sell each year. It fell to just under 4 per cent during the initial Covid period and rose to 6 per cent in late 2022 (around the time of the last housing market peak).
So, when the various housing price results are released, they firstly are based on the price achieved at sale compared to a corresponding previous timeframe and, secondly, they are based on a small proportion of the total dwelling stock.
Table 1 and chart 1 show the most recent ‘full’ results of this nature – that is a change in value based on sales activity.
Table 1: Median price of sold residential dwellings, 2022 v 2023
| Capitals + Regional areas | Quarters | Change | ||
|---|---|---|---|---|
| March 2022 | March 2023 | $ | % | |
Capitals |
||||
| Sydney | $1,069,500 | $975,250 | -$94,250 | -8.8% |
| Melbourne | $778,750 | $698,000 | -$80,750 | -10.4% |
| Brisbane | $656,000 | $649,000 | -$7,000 | -1.1% |
| Adelaide | $582,500 | $615,000 | $32,500 | 5.6% |
| Perth | $506,250 | $517,000 | $10,750 | 2.1% |
| Hobart | $716,500 | $649,500 | -$67,000 | -9.4% |
| Darwin | $528,000 | $489,750 | -$38,250 | -7.2% |
| Canberra | $810,250 | $783,500 | -$26,750 | -3.3% |
| Weighted average | $780,500 | $726,000 | -$54,500 | -7.0% |
Regional areas |
||||
| New South Wales | $691,750 | $674,500 | -$17,250 | -2.5% |
| Victoria | $557,500 | $533,000 | -$24,500 | -4.4% |
| Queensland | $518,000 | $535,250 | $17,250 | 3.3% |
| South Australia | $322,250 | $364,500 | $42,250 | 13.1% |
| Western Australia | $372,750 | $358,000 | -$14,750 | -4.0% |
| Tasmania | $515,250 | $489,500 | -$25,750 | -5.0% |
| Northern Territory | $437,750 | $462,250 | $24,500 | 5.6% |
| Weighted average | $557,500 | $557,250 | -$250 | 0.0% |
| Australia | $699,250 | $665,000 | -$34,250 | -4.9% |
Table 2: Mean price of all residential dwellings, 2022 v 2023
| States / Territories | Quarters | Change | ||
|---|---|---|---|---|
| March 2022 | March 2023 | $ | % | |
| New South Wales | $1,221,200 | $1,150,400 | -$70,800 | -5.8% |
| Victoria | $942,200 | $898,300 | -$43,900 | -4.7% |
| Queensland | $768,800 | $752,200 | -$16,600 | -2.2% |
| South Australia | $645,400 | $664,300 | $18,900 | 2.9% |
| Western Australia | $628,400 | $651,700 | $23,300 | 3.7% |
| Tasmania | $694,200 | $655,800 | -$38,400 | -5.5% |
| Northern Territory | $532,300 | $502,100 | -$30,200 | -5.7% |
| ACT | $983,900 | $951,800 | -$32,100 | -3.3% |
| Australia | $930,600 | $896,000 | -$34,600 | -3.7% |
Source: Matusik + ABS. Estimated value of all residential dwellings.
This suggests that dwelling values fell by 7 per cent across our capital cities over the past year and they didn’t move much apparently across the regional markets when the results are compiled into one value.
Across the country, using the sold method, housing values fell by $34,250 to $665,000 median price, or down 4.9 per cent when compared to 12 months ago.
Yet there is another way to measure what is happening with housing values and this involves a price estimate across all dwellings, not just that those that have sold during a survey period.
See table 2 and chart 2 for the most recent dwelling value estimates for all dwellings by state or territory across the county.
Source: Matusik + ABS. Quarterly, ending March 2023.
This indicator suggests that all dwelling values fell by just 3.7 per cent over the past 12 months.
Chart 2 shows that the estimated average value of all dwellings across the country is currently $896,000, which is down from $930,600 in March last year.
For mine, the all-dwellings results are more meaningful to far more of us – especially those that aren’t looking to sell in the near future, than the narrower sales results.
Moreover, the RBA and the banks should be using the all-dwelling indicator during the deliberations and assessing financial matters.
