House Value Decline Slows But Correction Not Over

Most capitals’ house values have continued to fall but the pace is slowing, according to the Corelogic National Home Values Index.

Sydney had the biggest fall in September with house values declining by 1.8 per cent, compared to 2.3 per cent in August. 

The NSW capital has also experienced the largest drop in house values from its peak, falling 9 per cent, or $104,300, below the January, 2022 high.

CoreLogic’s research director Tim Lawless said that Sydney’s Northern Beaches areas of Warringah, Pittwater and Manly, as well as areas across the Richmond-Tweed, also in NSW, had experienced the largest cumulative falls—at least 14.5 per cent since the peak earlier this year.

“These areas saw housing values rise between 38 per cent and 62 per cent through the growth cycle, so most home owners are still well ahead in terms of equity in their home,” Lawless said. 

Brisbane is catching up to Sydney with a drop of 4.3 per cent, or $33600, from the June, 2022 peak value.

But the rate of decline also eased for the Queensland capital, down 1.7 per cent in September compared to1.8 per cent in August.

Change in house prices 

_{Source: Corelogic National Home Values Index, September 2022}  

Melbourne’s rate of decline also eased—September was down 1.1 per cent against a 1.2 per cent in August.

Adelaide and Perth’s rates of decline in house prices stayed relatively steady with 0.2 and 0.4 per cent drops respectively in September. 

“We are still seeing some resilience to value falls around the more affordable areas of Adelaide and Perth, as well as some regional markets associated with agriculture, mining and tourism,” Lawless said. 

Darwin’s house values stayed steady but with values 10.1 per cent lower than the previous housing value peak, which was back in 2014.

Across the capital cities combined, values dropped 5.5 per cent, or $46,100, compared to the recent peak after a 25.5 per cent increase over the growth cycle. 

Across the combined regional index, values dropped 3.6 per cent, or $21700, compared to the peak in June. 

However, across the combined capitals, house prices must fall 13.5 per cent to wipe out any gains from the previous growth cycle.

▲ Melbourne’s house prices declined by 1.1 per cent in September.

Lawless said while the recent hike in interest rates had had an impact, it was too early to assume that the worst of the decline in house prices had passed.

“It’s possible we have seen the initial shock of a rapid rise in interest rates pass through the market and most borrowers and prospective home buyers have now ‘priced in’ further rate hikes,” Lawless said.

“However, if interest rates continue to rise as rapidly as they have since May, we could see the rate of decline in housing values accelerate once again.”

It wasn’t all bad news with other indicators more positive.

“Auction clearance rates also trended upwards, albeit subtly, in September and consumer sentiment nudged a little higher as well on the back of strong labour market conditions,” Lawless said.  

“We’ve also seen the flow of fresh listings continue to slide through the first month of spring, which is uncommon for this time of the year.”