Property values in Sydney and Melbourne have started to slide, falling as much as 7.2 per cent in the first quarter of the year, new analysis shows.
The CoreLogic Mapping the Market tool, which analyses 3111 capital city house and unit markets, showed a decline across 23.6 per cent of suburbs, with the majority of them in Sydney and Melbourne.
Of the 917 house and unit markets analysed in Sydney in the March quarter, 38.6 per cent recorded a fall in value, with more than half of the drops in the house market.
Quarterly declines ranged from a 7.2 per cent fall for houses in Beaconsfield, to a 0.01 per cent decrease in Gladesville.
CoreLogic Head of Research, Eliza Owen said the quarterly figures confirmed there was a gradual shift from a prolonged period of broad growth to a multi-speed market that differed between capital cities, regions and property types.
“High-end and inner-city areas are emerging as the first suburbs to experience this shift in market conditions,” Ms Owen said.
“It is likely that slightly tighter lending conditions and higher average fixed rates are hitting the very top of housing markets first.
“These same areas are seeing some of the bigger jumps in advertised stock levels too, so as we see new demand for housing in these areas decline, buyers have more choice, more time for decision-making, and more power at the negotiating table.”
In Melbourne, almost half (46.8 per cent) of the 648 house and unit markets recorded a dip in value in the March quarter.
Declines ranged from 6.4 per cent for houses in Cremorne to a slip of just 0.01 per cent for houses in Boronia.
Ms Owen said Melbourne had recorded two monthly market declines in four months and suburb movements confirmed the city was shifting into the downswing phase of its cycle.
“Quarterly declines have been more skewed towards the inner and inner-east of Melbourne, as higher fixed mortgage rates and affordability constraints may be seeing demand slip from the very top end of the market,” she said.
“This pattern is mirrored across Sydney, and it’s a pattern that has been observed through previous cycles.”
In contrast, Melbourne’s outer suburbs are thriving, with units in Wyndham Vale recording an increase in value of 6.7 per cent in the three months to March.
Brisbane and Adelaide continued to shine as Australia’s best performers.
Of the 651 house markets analysed across Brisbane and Adelaide, not a single one saw a quarterly or annual decline in value.
Minor falls in unit markets meant that less than 1 per cent of the markets analysed saw a quarterly decline.
Ms Owen said suburbs south of the Brisbane River performed well, with quarterly value increases of about 10 per cent in Acacia Ridge, Capalaba and Yeronga.
Topping the list for Greater Brisbane was Logan Central, where values increased 13.5 per cent in the March quarter.
“Conditions across southeast Queensland continue to be supported by strong interstate migration from those relocating from NSW and Victoria and the relatively affordable housing stock,” Ms Owen said.
“For those migrating from the southern states, a typical house in Brisbane was $857,000 in March, significantly less than Sydney’s median of $1.4 million.”
In Adelaide, the strongest quarterly value gains were in Largs North, Ottoway and North Haven, close to trendy breweries and beaches.
The stellar performance across Adelaide reflected the high, ongoing demand across the state, positive trends in interstate migration, relatively affordable dwelling values, and low levels of advertised stock.
CoreLogic’s median dwelling value for Adelaide was $602,000 at the end of March, making it the country’s third most affordable capital city behind Perth and Darwin.
In Canberra, just 5.2 per cent of the markets analysed recorded a quarterly decline in value.
The strength of the Canberra market was most evident in the unit sector, with no suburbs chalking up a fall over the quarter or year.
Ms Owen put the strength of Canberra’s unit market down to “relative affordability compared to the house segment, as well as increased investor participation in housing markets, as rents rise and units generally offer better gross rent yields.”
In Hobart, 10.9 per cent of the 55 house and unit markets analysed recorded a drop in values.
Ms Owen said Tasmania’s many tailwinds supported the market for long-term capital growth.
“While migration trends to the state have not been as favourable since the onset of COVID-19, eased travel restrictions may see a more robust return in domestic and international tourism, which would support economic conditions, and likely further tighten the rental market,” she said.
“This beautiful state still poses inviting opportunities for retirees and tree-changers, with dwelling values sitting relatively low compared with nearby southern states.”
In Perth, 13.4 per cent of markets saw a quarterly decline, while in Darwin that figure increased to 18 per cent.