Australian housing values fell for the fourth consecutive month in August as interest rates continued to hike, marking the sharpest drop in nearly four decades.
Sydney continued to lead the downward trend as its home values slipped by 2.3 percent in August, followed by Brisbane at 1.8 percent and Hobart at 1.7 percent.
CoreLogic’s research director Tim Lawless said Brisbane’s decline had been acute after the city experienced considerable growth in house prices for nearly two years due to record high internal migration and relative affordability.
Regional Housing Markets Drops Further In August
While housing markets in regional areas performed better than their urban counterparts, they were still subject to the overall trend.In particular, regional home values dropped by 1.5 percent in August, with the most significant falls observed in commutable areas booming during the COVID-19 pandemic.
For instance, house prices slid by 4.8 percent across Southern Highlands-Shoalhaven in New South Wales and 4.5 percent across the Sunshine Coast in Queensland over the past three months.
Although housing markets in Australia were softening, dwelling values still stood well above the pre-pandemic levels.
Compared to March 2020, all regions and capitals except Melbourne experienced growth of 15 percent or more.
Lawless anticipated that the downward trend in the housing industry would last throughout 2022 and was likely to continue into 2023, depending on the Reserve Bank of Australia’s (RBA) interest rate decisions.
Since May, the central bank has raised the official cash rate by 1.75 percent to combat growing inflation.
“It’s hard to see housing prices stabilising until interest rates find a ceiling and consumer sentiment starts to improve,” he said.
Renting Market Cools Down
Meanwhile, housing rent growth has started to slow down, with rental rates increasing by 0.8 percent across the country in August, down from May’s peak of one percent.This trend was most evident across regional Australia, where the annual rental rate growth dropped from 12.5 percent in November 2021 to 10.1 percent in August 2022.
In addition, CoreLogic said the slowdown was more noticeable in the detached housing sector, where prices were higher for tenants.
“This trend is reversing as tenants become more willing to rent in higher density situations, especially in Sydney and Melbourne where unit rents are now rising at a much faster pace than house rents,” Lawless said.