Property price falls slowing, but still far from over
National dwelling values fell 1 per cent in November. Photo: TND
Home owners have seen property prices drop this year, but new data shows the fall is slowing.
National dwelling values fell 1 per cent in November, the smallest monthly decline since June, CoreLogic data released on Thursday shows.
National dwelling values have lost about $53,400 below the peak value recorded in April, after climbing by about $170,700 during the recent upswing.
CoreLogic research director Tim Lawless said the easing in the rate of decline is mostly in Sydney and Melbourne markets, but it is also occurring in smaller capital cities and regional markets.
“There is still the possibility that the pace of declines could re-accelerate, especially if the current rate hiking cycle persists longer than expected,” he said.
“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.”
AMP Capital chief economist Shane Oliver told The New Daily the slowdown comes as the shock from the Reserve Bank of Australia’s series of cash rate hikes this year, the first since 2010, wears off.
“The slowing in the pace of decline is reflective of the market getting a little bit used to higher interest rates,” he said.
“But bottom line is, prices are still falling at a fairly rapid rate, and the deterioration in what a buyer can pay remains in place.”
Property prices still falling
With more cash rate rises expected, Dr Oliver said the national market hasn’t seen prices bottom out yet.
While dwelling values are still broadly above pre-pandemic levels, some markets are closer to March 2020 than others.
Dr Oliver said Melbourne house prices are only 2.8 per cent above pre-pandemic levels.
With values expected to drop further, the Melbourne market could see prices fall to pre-pandemic levels in early 2023.
Sydney, which saw bigger price hikes during recent peaks, has a bit further to fall as it currently sits about 10 per cent above pre-pandemic levels.
BuyersBuyers co-founder Pete Wargent said Sydney may see some recovery in prices, particularly in the lower end of the market, thanks to New South Wales’ stamp duty reforms that take effect from January 16.
The new laws will let first home buyers opt in to an annual land tax for properties valued less than $1.5 million instead of paying stamp duty.
Mr Wargent said the downturn in property prices has “a way to run”.
“As long as interest rates are going up, then prices will be going down,” he said.
“It’s just the question of, how much further does the Reserve Bank have to go to get inflation back down?”
Biggest booms, biggest declines
Across the capital cities, Brisbane and Hobart led the monthly rate of value decline in November at -2 per cent each, CoreLogic data shows.
At the other end of the spectrum, Perth dwelling values held firm and Darwin saw a 0.2 per cent rise over the same month.
Mr Lawless said the Perth and Darwin markets are yet to show signs of “a material reversal in housing prices”.
Perth and Darwin were hit hard by the 2013-14 collapse of the mining boom, which they are still recovering from, Dr Oliver said.
This means dwelling values weren’t propelled up anywhere near as much as other cities during recent peaks.
Mr Wargent said the biggest value falls are being seen where the biggest booms were felt.
“Places like the Sunshine Coast in Queensland or northern beaches in Sydney [boomed the most],” he said.
“So the places that saw the really big booms are actually the places that are seeing the biggest declines.”
