Australia's property prices have shown the biggest monthly decline in nearly four decades, while broader downswing value spreads across capital cities and regions. New data from property analyst firm, Corelogic, revealed that the national home value index slumped 1.6 percent in August, the biggest national monthly decline since 1983.
Sydney and Brisbane lead the downswing in capital cities, with values falling 2.3 percent and 1.8 percent respectively over the month. This is the fourth consecutive month that house prices in Australia declined. Corelogic suggested the downturn is accelerating and becoming more geographically broad-based, as regions are also catching up recording a 1.5 percent drop in combined regional values.
"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," said Tim Lawless, Founder and Research Director of CoreLogic's Asia-Pacific Research Division.
The consecutive declines came after historic surge in house prices throughout the pandemic, driven by low-interest rates and an increase in savings rates. Australia's central bank, the Reserve Bank of Australia (RBA), has increased rates four times from May to 1.85 percent due to the ‘high priority’ to contain inflation to the 2 percent-3 percent range. Lawless expected the downturn will continue to play out through the remainder of the year, and possibly into 2023, as the interest rates haven't found a ceiling.
"From current levels, interest rates are likely to increase by at least another 75 basis points," he said. "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."
Despite the recent weakness, Lawless added, housing values across most regions remain well above pre-COVID-19 levels, and it could imply a significant equity buffer. Home values in all capital cities apart from Melbourne remain around 15 percent above the levels recorded in March 2020.
