Australian home prices fall fastest since the GFC and the 1980s crash

Sydney property prices fell sharpest in 40 years as the national housing market boomed.

One market expert has equated the recession to the start of the global financial crisis and the crash of the early 1980s.

CoreLogic’s Home Value Index for July found that May’s interest rate hike was a trigger point.

Average national home prices dropped 1.3 percent compared to July, states CoreLogic, marking the third consecutive month of declining prices. During the quarter, national prices declined by 2 percent. The national average price is now $747,812.

This sits against a period of rapid growth during the pandemic where prices rose by 28.6 percent.

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CoreLogic’s House Price Index for July reflects a record-breaking downturn in Sydney. (corelogic)

The brightness is gone by the two-year-tall tree and the sea-change price boom has also led to price slides in regional areas. However, capital growth outside metro areas is holding up more strongly.

Although the Australian housing market is only three months into decline, price drops have been aggressive. According to data from CoreLogic, the property market cooldown is expanding beyond the high-value capitals of Sydney and Melbourne.

Five of the eight capital cities reported a fall in prices in July.

In Sydney, overall housing prices are down 2.2 per cent on the month, representing a record-breaking slowdown (or 4.7 per cent in three months).

The decline deepens when homes are broken down, falling 2.5 percent in value in July, or 5.3 percent in three months.

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An auction by the agency, North Epping, in full flight. (Peter Rae)

Tim Lawless, research director at CoreLogic, said housing prices had weakened “sharply” since the Reserve Bank removed the country’s cash rate in May for the first time after a 12-year honeymoon.

“The rate of growth in housing prices was quite slow before interest rates began to rise. However, it is clearly evident that the markets have weakened sharply since the first increase on May 5,” he said.

“Although the housing market is only three months into decline, the National Home Price Index shows that the rate of decline is comparable with the onset of the global financial crisis in 2008 and the sharp decline in the early 1980s.

“In Sydney, where the recession has been particularly sharp, we are seeing the sharpest price decline in nearly 40 years.

“Due to record high levels of debt, indebted households are more vulnerable to higher interest rates, as well as the additional negative impact on balance sheets and sentiment from too high inflation.”

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Tim Lawless, director of research at CoreLogic, said asset values ​​”have weakened sharply” since rates began to rise. (Vertical)

In Melbourne, values ​​declined 1.5 per cent during the month and Brisbane reached a milestone of negative growth – down 0.8 per cent for the first time since August 2020.

Brisbane was considered a strong market, while other eastern capitals began to lag behind.

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Hobart was down 1.5 per cent and Canberra was down 1.1 per cent.

Perth, Adelaide and Darwin resisted recessions to register growth, but as interest rates have moved upward, the pace of that growth is slowing, CoreLogic found.

Compared to July, Perth grew 0.2 per cent, Adelaide’s market grew 0.4 per cent and Darwin 0.5 per cent.

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The slump in the housing market has also spread to regional areas, but the metro has been the worst performer. (Vertical)

Domain managing editor Alice Stolz told TODAY Xtra on Monday that the drop in prices was a sign of the RBA’s “belt tightening” measures.

“But I think there is also inflationary pressure in the mix. We know a lot of homes are really feeling the pinch at the moment and with the increase in interest rates is really affecting buyer sentiment and people really Is gripping, ‘I’m going to stop, knock down the hatch, and wait’.

In regional areas, the combined housing median experienced its first decline since August 2000, down 0.8 percent month-on-month.

Regional Victoria (-0.7 per cent), New South Wales (-1.1 per cent), Tasmania (-0.6 per cent) and Queensland (-0.7 per cent) all experienced price declines. However, regional South Australia (up 1.1 percent) and Western Australia (up 0.1 percent) were exceptions and earned capital gains.

CoreLogic found most regional centers closer to capital cities, which attracted strong migration during the pandemic, reported declining home values ​​in the three months to July, ending two years of growth.

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