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Home prices suffer biggest fall since GFC

·Personal Finance Editor
·3-min read
Australian $100 notes stacked on top of each other and a sold sign in front of a home.
Home prices across the nation fell for the third consecutive month. (Source: Getty)

Home prices in Australia have fallen 1.3 per cent in July, marking the third consecutive month of losses.

Five of the eight capital cities recorded a month-on-month decline in July, led by Sydney and Melbourne where values fell 2.2 per cent and 1.5 per cent, respectively.

Brisbane also edged into negative growth territory for the first time since August 2020, with values down 0.8 per cent, while Canberra (-1.1 per cent) and Hobart (-1.5 per cent) were also down over the month.

However, many homeowners are still ahead after national dwelling values surged 28.6 per cent through the pandemic growth phase, with values only down 2 per cent from April’s peak, according to CoreLogic's July Home Value Index.

CoreLogic research director Tim Lawless said housing market conditions were likely to worsen as interest rates surged higher through the remainder of the year.

“The rate of growth in housing values was slowing well before interest rates started to rise, however, it’s abundantly clear markets have weakened quite sharply since the first rate rise on May 5,” Lawless said.

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

Lawless said the slowdown in Sydney had been particularly accelerated.

“We are seeing the sharpest value falls in almost 40 years,” he said.

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

Regions also suffer

And it’s not just the capital cities seeing a decline in property values, with regional markets also weakened in July.

The combined regional index recorded the first monthly decline (down 0.8 per cent) since August 2020.

Dwelling values were down across regional New South Wales (-1.1 per cent), regional Victoria (-0.7 per cent), regional Queensland (-0.7 per cent) and regional Tasmania (-0.6 per cent).

Overall, regional markets were still outperforming their capital city counterparts, but the July figures showed major regional centres were not immune to falling home values.

“Dwelling values across CoreLogic’s combined regionals index were up 41.1 per cent from the pandemic trough to the June peak, compared with a 25.5 per cent rise across the combined capitals index,” Lawless said.

“The stronger growth reflects a significant demographic shift towards commutable regional markets, which is likely to have some permanency as more workers take advantage of formalised hybrid employment arrangements.”

Most of the major regional centres adjacent to Sydney, Melbourne and Brisbane (including Geelong, Ballarat, Illawarra, Newcastle and Lake Macquarie, the Southern Highlands & Shoalhaven, the Gold Coast and Sunshine Coast) recorded a decline in home values over the three months to July, marking the end of nearly two years of significant gains.

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