Sydney and Melbourne’s national housing values showed a decline, says CoreLogic

family buying their first home

If you’ve been keeping up with property news, then you’ll know that housing values across Australia have been growing at an alarming rate. However, in some good news for first home buyers, CoreLogic’s most recent national home value index found that it is now slowing down!

In fact, the first quarter’s national dwelling values rose by 2.4%, which is less than half of 2021’s first-quarter rise of 5.8%.

A big slowdown came from Sydney with only a 0.3% growth (compared to 9.3% this time last year). Meanwhile, Melbourne saw a growth of just 0.1% when in the first quarter of 2021 it was at 5.8%.

While housing growth rates in Australia’s two biggest cities are finally losing momentum, there are some exceptions to this decline says CoreLogic’s research director Tim Lawless.

Related: 5 things you should know about the Australian property market in 2022

“There are a few exceptions to the slowdown, with regional South Australia recording a new cyclical high over the March quarter and some momentum is returning to the Perth market where the rate of growth is once again trending higher since WA reopened its borders,” he said.

“Nationally, the volume of housing sales is coming off record highs but there is some diversity across the capital cities in these figures as well. Our estimate of sales activity through the March quarter is 39% lower than a year ago in Sydney and 27% lower in Melbourne, while stronger markets like Brisbane and Adelaide have recorded a rise in sales over the same period.”

CoreLogic housing value index table
Source: CoreLogic

What does a decline in housing values mean for you?

Just like most parts of the economy, housing is driven by supply and demand. So when there is more supply of an item the price tends to decrease. 

For instance, in Melbourne, there was an 8% increase in houses advertised by the end of March compared to the last five years. While in Sydney the number is 7.5% higher than a year ago.

Related: How big was the property boom?

“With higher inventory levels and less competition, buyers are gradually moving back into the driver’s seat. That means more time to deliberate on their purchase decisions and negotiate on price,” says Lawless.

However, Brisbane and Adelaide are experiencing the opposite trend, as there are fewer dwellings being advertised. Lower supply and a high buyer demand leads to a hike in prices, which is reflected in the dwelling value increases for the first 2022 quarter.

Now, this might all sound like good news, because with dwelling prices going down there’s a sudden glimmer of hope for those who feel like they’ll never own a home. But sadly it's not that simple.

According to CoreLogic’s report, it’s presumed that the “rising fixed-term mortgage rates and the prospect of higher variable mortgage rates later this year are part of the reason why housing markets are likely to soften as 2022 progresses.”

The report also took into consideration that the higher costs of living has decreased the demand for homeownership as people begin to have less disposable income due to inflation.

But it’s not all gloom and doom. A recent research from NAB actually found that a quarter of Australians think 2022 is a good year to buy a home.

If 2022 is your year, start by skilling up on your home loan know-how. Our home loan resources page has loads of home loan guides and tips, as well as our range of handy home loan calculators. And to make sure that when the time comes to snag that dream home you’ll be ready to negotiate a top interest rate, compare home loan deals below.

Home loan comparisons on Mozo - last updated 13 August 2022

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

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