CoreLogic’s market mapping tool analyzed 3,111 capital city markets, finding that 23.6% of suburbs saw price declines – the majority in Sydney and Melbourne.
Of the 734 markets that saw price declines in the last quarter, 354 were in Sydney and 303 in Melbourne.
This is a total of 917 and 648 house and unit markets in each city respectively, representing 50% of the analyzed suburbs.
Eliza Owen, head of research at CoreLogic, said upscale and downtown areas have become prime markets for seeing falling house prices.
“Slightly tighter lending terms and higher average fixed rates are likely to hit the top of the housing markets first,” Ms Owen said.
“These same areas are also seeing some of the largest increases in advertised inventory levels. As we see further declines in demand for homes in these areas, buyers have more choice, more time to make decisions, and more of power at the bargaining table.”
On the other hand, of the 651 combined Brisbane and Adelaide home suburbs analysed, none experienced quarterly or annual declines in values. Unit markets fell slightly, representing less than 1% of the markets analyzed.
Ms. Owen said these markets are supported by strong interstate migration.
“For those migrating from southern states, a typical house in Brisbane cost $857,000 in March, well below Sydney’s median of $1.4 million,” she said.
There is also a record number of homes up for auction, with Melbourne recording its busiest week for homes under the hammer at 1,750.
Sydney also recorded its sixth busiest week at 1,481 according to preliminary auction data from CoreLogic.
SQM Research also pointed to a decline for home sellers, with asking prices falling over the past month despite remaining sharply high over the past 12 months.
For a house in Sydney, asking prices are down 0.4% on the month but up 24.1% year-on-year.
Canberra home asking prices are down 2.1% on the month and 29.7% year-on-year.
In all capitals, units continued to diverge from houses, with asking prices down 0.7% on the month.
The number of new listings was also up by 4.1% over the month in Sydney; 9.3% in Melbourne; and 16.4% in Canberra.
Nationally, new listings rose 5.7% in the month to March, but are flat at 0.2% over the past 12 months.
SQM chief executive Louis Christopher said it gave homebuyers more choice.
“We still have a shortage of inventory in the market, especially for Brisbane and Adelaide. Both of these cities continue to see massive increases in house prices as a result,” Mr Christopher said.
“Going forward, I expect we will soon enter a period of lackluster activity as the federal election approaches. After that, there will be an impending interest rate hike that the market will have to consider. .”
All major banks are now in line with expectations of an RBA cash rate hike in June, with Westpac at the table last week.
Many home loan rates are now also at pre-pandemic levels, with the size of home loans also increasing over the past two years.
AMP Capital senior economist Diana Mousina said the bank expects the RBA to raise its cash rate by 90 basis points through 2022.
“The general conclusion is that interest rates are rising, but they are unlikely to be high enough in Australia to choke off economic growth or cause a recession,” Ms Mousina said.
AMP Capital expects the ratio of real estate interest payments to revenues to reach just over 5% if the cash rate reaches 1%.
That’s 60 basis points higher than currently, but lower than the pre-2018 average of 6%, meaning “housing interest costs will not reach sustainable levels” according to Ms Mousina.
Photo by Rex7000 on Pixabay
The whole market has not been taken into account in the selection of the above products. Instead, a reduced portion of the market was considered. Products from some vendors may not be available in all states. To be considered, the product and price must be clearly published on the product supplier’s website. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au and Performance Drive are part of the Savings Media group. In the interest of full disclosure, Savings Media Group is associated with Firstmac Group. To learn how Savings Media Group handles potential conflicts of interest, as well as how we are paid, please visit the website links at the bottom of this page.