Property Market Review as of 16/01/2023: Australian home values hit the sharpest decline ever

Aggressive rate hikes and high inflation bite the market as national housing values hit the sharpest decline of -8.40% after peaking in May 2022.

January 16, 2023


After the aggressive rate hikes, all-time high inflation of 7.3% and continuous cost of living pressures, national housing values hit the sharpest decline of -8.40% on 7 January 2023 after peaking in May 2022.

Find out which cities lead the record-breaking fall.

Massive housing downturn sends house prices plunging by -8.40%

The national home values fell by -8.40% from 7 May 2022 to 7 January 2023, CoreLogic reveals. This breaks the previous record when prices declined by -8.38% between October 2017 and June 2019.

The data shows that most of the downturn came from Australia’s largest capital cities – Sydney, Brisbane and Melbourne. In less than 9 months, Sydney’s home values have declined by -13%, which is by -$150,758 in dollar value.

Meanwhile, Brisbane saw a -10% downfall from its peak, which is an average of -$78,381. Melbourne’s prices also tumbled by -8.6%, which is $70,243.

Of the smaller capitals, Adelaide led the price plunge with -1.6% (-$10,395) while Perth fell by -0.7%, which is -$3,897 in dollar value.

Based on CoreLogic, December’s national home values dropped by -1.1%. While this was higher than November’s record (-1.0%), this was still below August’s peak monthly decline of -1.6%.


In over 12 months, Australia’s dwelling values have fallen by -5.3%, making it the largest year-on-year decline in home values since 2008.


The fall in national home values may be the largest peak-to-trough decline on record, but at the end of 2022 home values were still 16.0% higher than they were five years ago, and 59.8% higher than they were 10 years ago,” said Eliza Owen, CoreLogic head of research.

Why are house prices dramatically falling now?

The Reserve Bank of Australia’s aggressive rate hikes in the past 8 months are the key drivers of this record-breaking decline. Coupled with inflationary pressures, the RBA’s 300-basis point increase in the cash rate constrained potential buyers’ borrowing capacity and decreased overall consumer confidence.

Moreover, Australians’ debt-to-income (DTI) ratio rose to a whopping 188.5% from 162.0% in 2012 and 130.2% in 2002. In turn, more households are wary of the increases in interest rates.

Low consumer sentiment and housing demand also coincide with the post-lockdown surge in spending that tanked household savings.

Nonetheless, Owen reminded that the dramatic downturn in housing prices comes from a very high base, “Softer housing demand may also reflect Australia’s ‘hangover’ from the elevated sales and listings activity through the 2021 boom, when an estimated 619,531 transactions occurred over the calendar year,”

It was the highest volume of housing sales in more than 18 years. Fuelled by record-low interest rates and stimulus such as HomeBuilder and low-deposit home loan schemes, may have brought forward many buying and selling decisions through the pandemic, resulting in less transaction activity in subsequent years,” she said.

In the next coming months, experts expect more rate hikes that will further soften the housing market. According to Owen, “The underlying cash rate is likely to see further increases in 2023, with market expectations pricing a peak of around 4%, while the median forecast from Australian economists is lower at 3.6%.

While higher inflationary pressures, rate hikes and restricted borrowing capacity may seem concerning, it’s a unique opportunity to take advantage of the lower prices. Don’t miss out on this chance to own a piece of the great Australian dream at a price you can afford.

To help you take advantage of the price falls, here are the 7 easy steps to getting a home loan from It’s Simple’s managing director, Joseph Daoud:

If you want to know your options and unlock the price ranges in your area, you can get your FREE property report today from Australia’s leading market information and analysis.

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