Property prices in Sydney and Melbourne decline for the first time since 2020
Posted On May 2, 2022
Australia’s two biggest property markets have experienced their first quarterly decline in prices since the onslaught of COVID-19 in 2020.
New data from property firm CoreLogic showed that in the last three months Sydney property prices fell 0.5 per cent to just over $1.1 million while Melbourne’s prices fell 0.1 per cent to $806,144.
The prices – which represent the median of both freestanding houses and apartments – are still far higher than they were a year ago, with Sydney still boasts an annual lift in prices of 14.7 per cent and Melbourne a growth of 8.4 per cent over the past 12 months.
CoreLogic’s Research Director Tim Lawless said several factors are weighing on Australia’s runaway property prices, the most pressing of which is a looming hike in interest rates.
“With the RBA cash rate set to rise, potentially as early as tomorrow, we are likely to see a further loss of momentum in housing conditions over the remainder of the year and into 2023,” he says.
“Stretched housing affordability, higher fixed term mortgage rates, a rise in listing numbers across some cities and lower consumer sentiment have been weighing on housing conditions over the past year.
“As the cash rate rises, variable mortgage rates will also trend higher, reducing borrowing capacity and impacting borrower serviceability assessments.”
But not every capital city experienced the same downturn as Sydney and Melbourne.
Brisbane is now the best-performing capital in the country, with prices growing 5.7 per cent over the quarter to $770,808.
It is closely followed by Adelaide (up by 5.4 per cent to $619,819) and Perth (up 2.4 per cent to $552,128).
On a national basis, Australia’s property prices as a whole grew 1.9 per cent over the past quarter to a national median value of $748,635.
Mr Lawless said the gulf between supply and demand in Sydney and Melbourne is shortening, with the balance of power shifting back towards buyers.
CoreLogic’s data showed Sydney’s advertised stock levels are now back in line with its five-year average, while Melbourne’s remains 8.2 per cent higher.
“With higher inventory levels and less competition, buyers are gradually moving back into the driver’s seat. That means more time to deliberate on their purchase decisions and negotiate on price,” Mr Lawless said.
He stressed that while today’s data was an early indication of Australia’s property market losing steam, it was important to keep in mind the stratospheric growth experienced over the past two years.
“Although we are expecting the housing market to move into a downturn through the second half of the year, it is important to remember the context of the recent growth phase,” he said.
“Since the onset of the pandemic, national housing values have increased by 26.2 per cent, adding approximately $155,380 to the median value of an Australian dwelling.”
Australia’s Median Property Prices, April 2022*
– 0.5 per cent
– 0.1 per cent
+ 5.7 per cent
+ 5.4 per cent
+ 2.4 per cent
+ 1.2 per cent
+ 2.2 per cent
+ 2.7 per cent
+ 1.9 per cent
*CoreLogic’s Hedonic Home Value Index as of 30 April 2022
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