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Property values fall for seventh consecutive month

Property values have dropped more than $50,000 since their peak in April according to the latest CoreLogic Home Value Index.

The fresh data, released today, shows the HVI fell for the seventh consecutive month, down 1 per cent in November.

That puts property prices 7 per cent down, or about $53,400 lower, on the peak value recorded in April.

Although values continue to trend lower, the rate of decline has been consistently moderating since the national index dropped 1.6 per cent  in August.

CoreLogic Research Director Tim Lawless said the easing rate of decline was mostly emanating from the Sydney and Melbourne markets, but was also evident across many of the smaller capitals and most regional markets.

“Three months ago, Sydney housing values were falling at the monthly rate of 2.3 per cent,” he said.

“That has now reduced by a full percentage point to a decline of 1.3 per cent in November. 

“In July, Melbourne home values were down 1.5 per cent over the month, with the monthly decline almost halving last month to 0.8 per cent.”

Mr Lawless said the rate of decline had also eased in the ACT and is no longer accelerating in Brisbane. 

Most of the broad rest-of-state markets have also seen the pace of declines decelerate.

“Potentially we are seeing the initial uncertainty around buying in a higher interest rate environment wearing off, while persistently low advertised stock levels have likely contributed to this trend towards smaller value fall,” Mr Lawless said.. 

“However, it’s fair to say housing risk remains skewed to the downside while interest rates are still rising and household balance sheets become more thinly stretched.

“There is still the possibility that the pace of declines could reaccelerate, especially if the current rate hiking cycle persists longer than expected. 

“Next year will be a particular test of serviceability and housing market stability, as the record-low fixed rate terms secured in 2021 start to expire.”

Source: CoreLogic

Across the capital cities, Brisbane and Hobart (both down 2 per cent) led the monthly rate of decline in November, while at the other end of the spectrum, Perth values held firm and Darwin nudged 0.2 per cent higher over the month.

Mr Lawless said the Perth and Darwin markets were yet to record any signs of a material reversal in housing prices.

“A comparatively healthy level of housing affordability, along with tight labour markets and relatively strong economic conditions, have helped to insulate these cities from the downturn so far,” he said.

Across the broad housing types, unit markets continued a run of relative resilience. 

In November, capital city unit values were down 0.6 per cent, while house values declined at twice the pace with a 1.2 per cent drop. 

This trend has been seen throughout the downturn to-date, with capital city unit values down 4.7 per cent from the recent peak, while house values are down 8.4 per cent.

“Every capital city apart from Hobart is recording a more resilient outcome for unit values relative to houses,” Mr Lawless said.

“This trend can at least partially be attributed to the more moderate gains recorded during the upswing, but probably also reflects the unit sectors more affordable price point at a time when borrowing capacity has reduced.”

Sydney remains the only city where housing values have fallen by more than 10 per cent from their peak. 

Through the upswing, Sydney values increased 27.7 per cent before peaking in January. 

Despite the sharp fall in values through the downturn to-date (11.4 per cent), Sydney home values remain 10.3 per cent above pre-COVID levels from March 2020.

Due to a weaker upswing, Melbourne values are only 2.8 per cent above where they were at the onset of Covid.

If housing values continue to fall at the current pace of 0.8 per cent month-on-month, Melbourne’s dwelling values could fall to pre-Covid levels by March next year.

Most of the other capital city and broad rest-of-state regions are still recording dwelling values at least 25 per cent above March 2020 levels.

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