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Aussie property prices suffer biggest fall ever

Aussie home prices have sunk. Here's where prices have fallen the most.

A composite image of a row of terrace houses in Sydney representing Australian property and Australian currency.
The Aussie property market has suffered its biggest price drop on record. (Source: Getty)

Aussie property prices have copped a record decline of 8.4 per cent after reaching a peak on May 7 last year.

The CoreLogic Daily Home Value Index (HVI) results have taken the national housing downturn into new territory, breaking the previous record of peak-to-trough declines.

“While the housing downturn between 2017 and 2019 lasted 20 months, the new record-breaking price falls have played out in less than nine months, with further falls expected in the months ahead,” CoreLogic said.

What’s driving home prices down?

CoreLogic said the main reason behind the property value falls was the recent interest rate hikes by the Reserve Bank of Australia (RBA).


“A 300-basis-point increase in the underlying cash rate over just eight months has resulted in a rapid reduction in borrowing capacity, lowering the amount buyers can offer for homes. In addition to constrained borrowing capacity, higher interest costs may be dissuading potential buyers altogether,” CoreLogic said.

Aussies also have more debt than in past periods of rate rises, with the RBA’s latest estimate of housing debt-to-income ratio sitting at a whopping 188.5 per cent.

“A decade ago, this figure was 162.0 per cent and, in 2002, the ratio was 130.2 per cent. Higher household indebtedness may have increased the sensitivity of housing values to interest rate rises,” CoreLogic said.

Of course, cost-of-living pressures have also taken a toll, especially when combined with the post-lockdown surge in spending - which helped to whittle down savings and push inflation even higher.

Where are prices falling the most?

The bulk of the downturn was being led by Australia’s three largest capital cities, which also had the largest weighting in the national home value index, CoreLogic said.

Sydney home values have seen a peak-to-trough decline of 13 per cent, Brisbane values have fallen 10 per cent and Melbourne values are down 8.6 per cent from the peak. At the other end of the spectrum, Perth dwelling values have fallen less than 1 per cent from a peak in August last year.

For perspective, the 8.4 per cent drop has come off a high base. The sharp decline in prices follows an upswing of 28.9 per cent between September 2020 and May 2022, which was the fastest rise in home values nationally on record.

The fall in national home values may be the largest peak-to-trough decline on record but, at the end of 2022, home values were still 16 per cent higher than they were five years ago, and 59.8 per cent higher than they were 10 years ago.

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