Sydney recorded a 3 per cent drop in house values in the June quarter, according to the latest CoreLogic Home Value Index, compared to a 2.1 per cent fall in unit values.
Melbourne followed a similar trajectory, with units in the city declining 0.5 per cent compared to 2.5 per cent for houses in the quarter.
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CoreLogic research director Tim Lawless said the stronger performance across the unit sector came after house values consistently outperformed units through the recent upswing.
“Since the onset of the pandemic in March 2020, capital city unit values have risen 9.8 per cent compared to 24.7 per cent for houses, resulting in better affordability across the medium- to high-density sector,” he said.
Sharper falls in Sydney and Melbourne
Australia's two biggest cities have led the nation’s property market into its second month of value declines, with dwelling values down 0.6 per cent in June nation-wide and down 0.2 for the quarter.
Dwelling values in Sydney have seen the sharpest falls, with dwelling values down by 1.6 per cent in the country’s most populous city for the month and 2.8 per cent for the quarter.
Despite the falls, the median dwelling value in the city is still sitting at $1,110,660.
Home prices in Melbourne also fell by 1.1 per cent for the month and 1.8 per cent for the June quarter.
Hobart’s housing market also recorded a drop of 0.2 per cent in June, down 0.1 per cent for the quarter.
While house price growth continued across the rest of the country, all regions were now “well past” their peak rate of growth.
“Since the initial cash rate hike on May 5, most housing markets around the country have seen a sharper reduction in the rate of growth,” Lawless said.
“Considering inflation is likely to remain stubbornly high for some time, and interest rates are expected to rise substantially in response, it’s likely the rate of decline in housing values willcontinue to gather steam and become more widespread.”
Exactly how far house prices will fall remains “highly uncertain”, according to the CoreLogic report, however many experts now expect at least a 10 per cent drop.
This kind of drop would still see home values well above pre-pandemic levels, but would return the market to around levels seen in April 2021.