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Wednesday, February 8, 2023

Australian Property Market Hits Record Low

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Australian Property Market Hits Record Low

By Adam Vidler

Australian home values have marked a record decline in the first week of the new year, after peaking on May 7, 2022.

CoreLogic’s daily home value index slumped by 8.4 per cent in that time, breaking the previous fall of 8.38 per cent between October 2017 and June 2019.

And this new fall played out over a much shorter time frame of less than nine months compared to 20 months for the previous record.

Home values in Australia have recorded a record plummet.

CoreLogic warned further falls could be expected in the months ahead.

The property data company attributed the record slump to the recent cycle of rate hikes that, in comparison to the record fall, had risen at the fastest pace on record.

A collective hike of three per cent in the cash rate in just eight months not only saw borrowing capacity restricted, but could have put potential buyers off due to higher interest costs.

The downturn has been most apparent in Australia’s three biggest property markets.

Sydney home values have fallen 13 per cent from their peak, Brisbane 10 per cent, and Melbourne 8.6 per cent.

However, in Perth, prices are down just one per cent from their local peak in August 2022.

CoreLogic’s research also showed that the drop in house values had come from a historically high position.

Though the 8.4 per cent fall has been sharp, it followed a constant escalation that amounted to 28.9 per cent between September 2020 and May 2022.

At the end of 2022, despite the record drop, home values were still 16 per cent higher than five years ago, and a whopping 59.8 per cent higher than 10 years ago.

But market conditions are expected to remain soft in 2023 due to forecast further interest rate hikes.

Australians are also more indebted today than through historic periods of rate rises, with the latest Reserve Bank of Australia’s estimate of housing debt-to-income ratio sitting at 188.5 per cent.

A decade ago this figure was 162.0 per cent and in 2002 the ratio was 130.2 per cent.

Original source: https://www.9news.com.au/national/home-value-record-decline-australia-corelogic-finds/0c3e7586-f310-411b-ab19-d38068078794

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