Property prices declined at a slower rate during the December quarter according to Domain, in a sign that the current downturn may be losing momentum.
Combined capital house prices declined at a rate six times slower, and unit prices three times slower, than they did in the September quarter, Domain’s latest House Price Report shows.
House prices fell 0.7 per cent across the combined capitals in the December quarter, while unit prices fell 0.8 per cent.
Nicola Powell, Domain Chief of Research and Economics said that it was likely the spring selling season bore the brunt of changing buyer sentiment following a sharp rise in interest rates and high inflation.
“This is why the September quarter saw house prices fall at their fastest quarterly rate,” Dr Powell said.
Buyers were likely beginning to adjust to the new financial landscape, she said.
“Now in the December quarter, the data suggests that the peak rate of the quarterly decline has passed as buyers have had time to adjust to the new norm of rising debt cost and reduced borrowing capacity,” she said.
Better quarter for Sydney, Melbourne
Sydney house prices declined by 2.1 per cent over the quarter, three times slower than September’s decline, Domain’s House Price Report shows.
Melbourne‘s house prices actually recorded a slight uptick of 0.7 per cent over the December quarter, though they remain down 5.6 per cent year-on-year.
Brisbane house prices fell at 1.8 per cent, half the rate recorded in September.
Canberra house prices fell by 0.3 per cent, while all remaining capital cities recorded an uptick in house prices during the December quarter.
Optimism for year ahead
While property prices remained weak, the report indicated late 2023 could offer relief for sellers.
“While lingering weakness has persisted in the property market, the potential end of interest rates later this year will bring in more buyers and sellers, creating some green shoots for the months ahead,” Dr Powell said.
“That doesn’t discount from an unsettled RBA environment and tight serviceability requirements
which will take time for consumers to shake off.”
Dr Powell said unit prices would likely hold firmer in the year ahead due to continued demand from first-home buyers, helped on by various state and federal government support schemes.
“The property price falls and the state and federal government support schemes for affordability challenged buyers, such as the NSW Government First Home Choice Scheme, is going to bring first-home buyers front and centre this year,” she said.
“For this reason, we’ll likely find that unit prices will hold firmer for market entrants as affordability constraints, reduced borrowing capacity, an extremely tight rental market and migration returning will continue to support demand.”