House prices in Australia have fallen 2.7 per cent nationally since their peak and any rise since the beginning of 2022 has all but disappeared, new research has shown.
In August, Australian house prices fell 0.39 percent, but regional areas have been hardest hit by rising interest rates with prices falling at their fastest pace since 2011, the report showed. PropTrack’s latest home price index released on Thursday.
Sydney prices continued to fall by 0.49 per cent, but have seen a particularly dramatic drop in the last six months.
“All capital city markets are now below their price peaks, with Sydney prices down 0.87 per cent compared to August 2021, making it the only capital city to see a decline. during the year,” said Paul Ryan, author of the report and senior economist at PropTrack.
“This follows persistent price declines since March this year, with prices now 4.8 per cent below their February price peak. Higher interest rates are hitting the regions with the highest price points and Sydney, the most expensive market, has so far seen the biggest price drops.
In Melbourne, house prices fell 0.47 per cent in August, continuing the trend from the beginning of the year.
“Prices are now at the same level as a year ago, and more than 4 percent below their peak in February,” Ryan said.
“Price declines are expected to continue in Melbourne over the coming months as higher interest rates limit borrowing capacity.”
A capital city that had managed to stave off falling house prices has now been hit.
Prices in Brisbane had fallen “noticeably” 0.3% in August and were 1.2% lower than the peak recorded three months ago.
“Slowing growth means Brisbane prices are up 17% over the past year after posting annual growth rates of over 30% earlier in the year,” Ryan said.
“However, prices are still almost 50% higher than in March 2020. Strong migration
Flows into south-east Queensland are likely to prevent Brisbane from experiencing the largest
the price falls over the next year.”
Meanwhile, Adelaide saw its first price drop for the first time this year – down 0.12% and the biggest price drop since mid-2019.
“Despite this, Adelaide is now the best performing capital city market over the past year, up 19 per cent, with regional SA the single strongest market across the country,” said Mr. Ryan. “Continued relative affordability means we expect Adelaide to see smaller price declines than other markets, given typical home values are still below $700,000.”
Hobart saw the largest price drop in the entire country with a whopping 0.56 percent drop, while in the ACT prices fell 0.39 percent.
Darwin prices rose slightly in August, but price growth slowed rapidly in 2022 with prices rising just over 5 per cent in the city over the past year, the report revealed.
The combined regional areas fell 0.34% in August and have now fallen 1.2% in the last three months, the biggest quarterly drop since 2011.
“Despite recent declines, prices are still significantly above their pre-pandemic levels,” Ryan wrote. “Regional areas are still up nearly 50 percent from March 2020. Capital city prices are up 26 percent over the same period.”
But Ryan said they expect home prices to continue to fall across the country in 2022 and into 2023.
“Regional areas are now falling persistently, but remain cushioned by the affordability and lifestyle appeal that has driven these markets to outperform over the past two years,” he said.
“In the short term, spring will see a pick-up in market activity, despite prices falling as buyers and sellers adjust to higher interest rates.”
However, economists predict Australian house prices will rise again in 2024 after a pandemic-driven slump, warning buyers in big cities to brace for another spike.