Housing price downturn hits the regions

A fourth consecutive month of property declines is becoming more geographically based, as regional property price growth is now facing a price downturn.

CoreLogic’s national Home Value Index (HVI) recorded a 1.6% decline in August, the largest month-on-month decline in property values since 1983.

The only area of price growth recorded by CoreLogic in August was regional South Australia which recorded a 0.8% increase in housing values.

CoreLogic head of research Tim Lawless (pictured above) said regional dwelling value declines were now catching up with capital city price drops.

“Regional home values were down 1.5% in August compared with a 1.6% fall in values across the combined capitals,” Lawless said. “Between March 2020 and January 2022, regional dwelling values surged more than 40% compared with a 25.5% rise for the combined capitals.

“The largest falls in regional home values are emanating from the commutable lifestyle hubs w. housing values had surged prior to the recent rate hikes. Over the past three months, values are down 8.0% across the Richmond-Tweed, 4.8% across the Southern Highlands-Shoalhaven market and 4.5% across Queensland’s Sunshine Coast.”

Sydney continued its property price downswing with values falling 2.3% during August, however weaker conditions in Brisbane accelerated sharply with values falling 1.8% during the final month of winter.

Lawless said Brisbane’s shift into decline had been acute after almost 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% boom in values,” Lawless said. “Over the past two months, the market has reversed sharply with values down 1.8% in August after a 0.8% drop in July.”

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Lawless said the annual trend in housing values was rapidly levelling out.

“After moving through a peak annual growth rate of 21.3% in November last year, the annual growth rate across the combined capitals has eased back to just 2.2%. Values across Sydney are down -2.5% and Melbourne by -2.1% which are now below the level recorded this time last year,” he said.

“Despite the recent weakness, housing values across most regions remain well above pre-COVID levels.  Home values in all capital cities and rest-of-state regions, bar Melbourne, remain 15% or above the levels recorded in March 2020, implying most homeowners have a significant equity buffer before their home is likely to be worth less than what they paid.”

Read more: National house prices could fall $150k by 2023

Lawless said he expects the downturn would 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 t. 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.”

The change in dwelling values as of August 31, 2022 are:















City / Area

Month

Quarter

Annual

Total Return

Median Value

Sydney

– 2.3%

– 5.9%

– 2.5%

– 0.7%

$1,066,493

Melbourne

-1.2%

– 3.8%

– 2.1%

– 0.8%

$782,053

Brisbane

-1.8%

– 2.5%

17.5%

21.7%

$762,284

Adelaide

-0.1%

1.6%

21.8%

25.7%

$652,959

Perth

-0.2%

0.4%

4.9%

9.4%

$561,781

Hobart

-1.7%

-3.3%

5.8%

9.8%

$714,370

Darwin

0.9%

2.3%

6.3%

12.8%

$512,531

Canberra

-1.7%

– 2.6%

7.8%

12%

$909,748

Combined Capitals

-1.6%

– 3.8%

2.2%

4.8%

$808,287

Combined Regionals

-1.5%

-2.1%

13.4%

17.5%

$594,006

National

-1.6%

-3.4%

4.7%

7.5%

$738,321

source