2022 the worst year for property price drops since the GFC

December home price figures paint a mixed picture for a property market that came under intense pressure from rising interest rates during 2022, with some smaller capital cities still recording positive price growth despite a decline in national values not witnessed since the Global Financial Crisis.

Both CoreLogic and PropTrack reported a decline in home prices across the country in December, though the figures reported by the two firms, which use different methodologies to calculate their value indices, differed.

CoreLogic reported a 1.1 per cent decline in values nationally for December, an uptick on the monthly declines posted in the preceding three months.

PropTrack placed the national decline at 0.21 per cent for December, with all capital cities bar Darwin and Hobart recording a drop.

A worsening in Melbourne’s monthly market performance was behind the increased decline in the CoreLogic figures, with values in that city falling by 1.2 per cent, a faster rate of decline than the 0.8 per cent drop recorded in November.

Month-on-month price declines also accelerated across Sydney (-1.4 per cent), Adelaide (-0.4 per cent), Darwin (-0.5 per cent) and Canberra (-1.2 per cent), according to CoreLogic.

Brisbane (-1.5 per cent) and Hobart (-1.9 per cent) recorded a moderation in property value declines in December, while Perth (0.1 per cent) recorded its second month of positive growth.

A poor performance in Canberra (-0.43 per cent) and Melbourne (-0.34 per cent) was responsible for dragging down the PropTrack index, PropTrack Economist Anne Flaherty said.

Home values were also down in Sydney (-0.9 per cent), Brisbane (0.18 per cent), Adelaide (0.18 per cent) and Perth (-0.05 per cent) over the month of December, according to PropTrack.

Hobart recorded an increase in home values of 0.11 per cent and Darwin and increase of 0.32 per cent during the same period, PropTrack reported.

Values end of year 5.3 per cent lower: CoreLogic

Home values ended the year 5.3 per cent lower than they were at the start of 2022, according to CoreLogic, marking the first year of price declines since 2018 and the steepest annual decline in values since 2008.

Values in Sydney declined by 12.1 per cent over the year and dipped 8.1 per cent in Melbourne, 6.9 per cent in Hobart, 3.3 per cent in the ACT and 1.1 per cent in Brisbane.

Last year values were up 10.1 per cent in Adelaide, up 4.3 per cent in Darwin and up 3.6 per cent in Perth.

CoreLogic Research Director Tim Lawless said that the decline was even more dramatic when calculated from when prices peaked in May.

“Our daily index series saw national home values peak on May 7, shortly after the cash rate moved off emergency lows,” he said.

“Since then, CoreLogic’s national index has fallen 8.2 per cent, following a dramatic 28.9 per cent rise in values through the upswing.”

The decline had started in the upper quartile of property values, Mr Lawless said, but had now spread to lower tiers of the market.

“The more expensive end of the market tends to lead the cycles, both through the upswing and the downturn,” he said.

“Importantly, recent months have seen some cities recording less of a performance gap between the broad value-based cohorts. Sydney is a good example, where upper quartile house values actually fell at a slower pace than values across the lower quartile and broad middle of the market through the final quarter of the year.”

Despite the declines, most markets were unlikely to see the erosion of all their pandemic price gains with the exception of Melbourne.

“Melbourne is the only capital city where the current downwards trend is getting close to wiping out the entirety of COVID gains, with dwelling values only 1.5 per cent above March 2020 levels,” Mr Lawless said.

Regions outperform: PropTrack

National values are now 2.29 per cent lower than they were in December 2021 and 4.25 per cent lower than their recent peak, according to PropTrack’s index.

“At a national level, property prices have seen nine consecutive months of price declines, now sitting 4.25 per cent below their peak,” Ms Flaherty said.

“Performance has been mixed across markets, however the largest falls were recorded in the more expensive capital cities of Sydney, Melbourne, and Canberra, while more affordable markets have displayed greater resilience.”

She pinned the blame for price declines on the Reserve Bank of Australia hiking the official cash rate in response to rising inflation.

“Rising interest rates were the primary driver of price declines in 2022,” she said.

“Interest rates increased for the eighth consecutive month in December, placing further strain on borrowers. The borrowing power of the average buyer has been slashed by around 25 per cent due to the cumulative impact of these rate rises.”

Ms Flaherty said price declines had been less pronounced in regional areas during 2022.

“Comparing year-on-year, regional markets have outperformed their capital city counterparts in every state,” she said.

“Regional price declines were more subdued, down 0.17 per cent nationally. Regional Queensland (-0.33 per cent) saw the largest drop, while regional Western Australia, Northern Territory, and South Australia defied the national trend to reach new peaks.”

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Jack Needham

Jack Needham is the Digital Editor at Elite Agent

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