Home price falls have accelerated – except in this one bulletproof city

Home price falls across the country have deepened as a lackluster spring selling season comes to a close amid growing interest rate uncertainty.

The new PropTrack Home Price Index for November shows a national decline in property values ​​of 0.16% last month.

Prices fell in almost every capital city, report author and PropTrack senior economist Eleanor Creagh said, with Darwin posting the largest fall in the month of 0.49%.

Melbourne followed closely behind, with home prices slipping 0.33% while Sydney saw a 0.14% drop.

“Regionally, prices fell the fastest in Queensland in November, dropping 0.49%,” Ms Creagh said. “But still, regional home prices are holding up better than in the capital cities.”

Across all regional markets, home prices fell 0.16% last month but are still 3.89% higher than they were a year ago.

In comparison, combined capital city property prices are down 3.09% year-on-year following another decline in November of 0.16%.

A sunset over the city of Adelaide

Adelaide continues to buck the trend of falling home prices, hitting a new growth peak in November. Picture: Getty

One city continues to buck the trend, defying the pressure placed on markets by the Reserve Bank’s rapid increases to the official cash rate.

“South Australia continues to dodge the downturn,” Ms Creagh said.

“Home prices in Adelaide last month grew by 0.25% to reach a new price peak. In regional South Australia, home prices recorded the strongest growth in November, up 0.3% to also hit a new peak.”

Each capital city at a glance

The latest Home Price Index shows Sydney home prices have fallen persistently since March, with the Harbor City experiencing the sharpest declines of any market.

A further 0.14% reduction in November means home prices are now 6.44% lower than they were this time in 2021.

“As interest rates have risen, prices have fallen fastest across more expensive regions, and given Sydney is the country’s costliest market, it’s bearing the brunt,” Ms Creagh said.

An aerial view of a typical Sydney suburb

Home price falls have been particularly sharp in Sydney – the country’s most expensive market. Picture: Getty

Home price falls in Melbourne accelerated last month, dipping 0.33% to be 4.49% lower year-on-year.

“Price falls are expected to continue in Melbourne in the period ahead as rates continue to rise, further eroding borrowing capacity,” she said.

In Brisbane, home prices were down very modestly by 0.04% and are now 2.71% below their April peak.

But the Queensland capital is the second-strongest city market in the country, with home prices 4.72% stronger than they were a year ago.

The stairs of a classic Queenslander home in Brisbane

Despite recent falls, Brisbane’s housing market is holding up well. Picture: Getty

Adelaide’s market is a stand-out, bucking November’s price fall trend to record a 0.25% increase – a new peak. The annual growth rate in the South Australian capital is 12.63%.

“Demand for more affordable areas and larger homes has insulated the Adelaide market,” Ms Creagh said. “I expect it will continue to do so.”

Home prices in Perth recorded a very slight fall last month of 0.04%, but the West Australian capital continues to hold up better than its eastern counterparts.

Prices are 4.13% higher in Perth now than they were in November 2021 and are just shy of peak levels.

Darwin led the country’s decline last month with a 0.49% reduction in home prices, sitting just 0.77% above this time last year.

Canberra’s housing market remains flat, with just a 0.02% dip in home prices, which are sitting 4.2% above their peak in March.

And in Hobart, home prices fell 0.27% in November. They’ve dropped 2.92% from their April peak but are 1.06% higher than this time last year.

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“Despite all of these recent falls, home prices nationally are still 30% higher than they were pre-pandemic,” Ms Creagh pointed out.

“It would take a significant and prolonged retraction to wipe out those gains – and there remain positive demand drivers that will offset the pressure from interest rates to a degree.”

Impact of rate rises evident

The RBA’s rapid interest rate hikes over the past several months have quickly rebalanced housing markets across much of the country.

The cost of servicing a mortgage has gone up while borrowing capacity has reduced, putting pressure on buyer sentiment and seeing competition cool.

“National home prices have fallen for the eighth month in a row on the back of the fastest rate tightening cycle we’ve seen since the 1990s,” Ms Creagh said.

“While the pace of price falls we’re seeing lately is significantly slower than we saw in June and July, just after the initial rate hikes, the downturn has continued to deepen.”

The impact of rapid rate rises by the Reserve Bank are evident in home price falls. Picture: Getty

It’s almost certain the RBA board will lift rates again when it meets next Tuesday, likely by 25 basis points.

“That will take the cash rate above 3% – a move that’s widely expected,” Ms Creagh said.

“With additional rate rises on the horizon, borrowing costs will continue to increase and borrowing capacities will shrink further.

“The significant reduction in how much would-be buyers can borrow implies further home price falls are likely.”

But with unemployment close to a 50-year low and wages growth beginning to pick up some of that pressure may be offset, she added.

“Price falls are likely to ease when the RBA stops raising rates sometime in 2023.”

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