Aussie property prices falling at fastest rate since 1983

Rising interest rates continue to deal a blow to the Australian property market, with prices across the country falling 1.6 per cent over August, the largest monthly decline in almost 40 years.

Property research firm CoreLogic found that every major Australian city is in the midst of a downturn, save for Darwin where property prices lifted 0.9 per cent last month.

Among capital cities, Sydney currently leads the downswing with a 2.3 per cent decline last month, followed by Brisbane (-1.8 per cent), Canberra (-1.6 per cent) and Hobart (-1.6 per cent).

Property prices have been coming off since peaking in April this year, with the current slump expected to last throughout the year and potentially into 2023.

CoreLogic research director Tim said the home values will also take a hit over the coming months as an increase in advertised stock over the spring selling season tilts things further in favour of buyers.

“The flow of new listings this spring season may not be quite as active with the housing downturn dissuading some prospective vendors, but we are likely to see more listings added to the market than in winter,” he said.

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“At the same time we are expecting to see less buying activity as higher interest rates and low sentiment continue to weigh on demand. 

“Should this scenario play out, the net result will be an accumulation of advertised supply that could further weigh down values.”

But Lawless urges calm, reminding Australians that prices in all capital cities and rest-of-state regions (except Melbourne) remain at least 15 per cent higher than they were in March 2020.

“A 15 per cent peak to trough decline would roughly take CoreLogic’s combined capitals index back to March 2021 levels,” he said.

“Additionally, many homeowners would have had at least a 10 per cent deposit and paid down a portion of their principal, the risk of widespread negative equity remains low.”

Rental growth slowing in the housing sector

CoreLogic’s national rental index also increased by 0.8 per cent last month. While still up, this marks a slight slowdown following May when rents rose by 1 per cent. 

Rental growth was slowest in the detached housing sector, which saw an increase in popularity over the pandemic period.

“This trend is reversing as tenants become more willing to rent in higher density situations, especially in Sydney and Melbourne where unit rents are now rising at a much faster pace than house rents,” Lawless said.

“Potentially we are seeing the first signs of smaller rental households that formed earlier in the pandemic reverting back to larger households or utilising higher density rental options to combat worsening rental affordability.”

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