House and unit values dropped in more than half of the suburb markets in the December quarter as consecutive rate hikes and high inflation weaken consumer confidence and housing demands.
After the COVID housing boom, CoreLogic’s latest figures show that the housing downturn worsened compared to a year ago when only less than 10% of houses and units declined in value.
Previously, CoreLogic revealed that national home values hit their sharpest decline as prices plunged by -8.40% from 7 May 2022 to 7 January 2023.
House values
The downfall was more widespread in Sydney where 98.7% of the 547 house suburbs analysed fell in value. This decreased the number of million-dollar house suburbs to 345 in December from 439 in March.
In Melbourne, 98.4% of the 371 house suburbs recorded a decline in the December 2022 quarter while 97.8% fell in annual house value.
While Sydney and Melbourne led the downtrend, the pace of decline slightly eased compared to the September quarter’s record when 100% of the house values in both cities dropped in value.
According to CoreLogic Economist, Kaytlin Ezzy, “The market downswing doesn’t discriminate, with only a small proportion of suburban areas riding a wave of positive growth among the sea of declining values,”
“This has resulted in a reduction in the number of million-dollar suburbs, particularly in our most expensive housing market, Sydney, with the most resilient suburbs found in more affordable areas and within the unit sector.”
Quarterly value decline in Brisbane remained steady with 94.4% (302) of the 320 suburbs decreasing in value. Meanwhile, Adelaide’s house values steeply fell from -0.3% in September to -1.4% in December 2022.
Hobart‘s quarterly change accelerated as the housing market fell by -5.0%, which took the city’s median house value to $725,736.
Over the three months to December, Darwin recorded an 84.2% (32) decline, up from 35.1% in September. In Canberra, 100% of the 83 house suburbs analysed fell in value – taking its annual decline from 27.1% in September to 86.7% in December.
Defying the trend was Perth where house values increased by 0.1% over the December quarter. Nonetheless, Perth is still the most affordable capital city for stand-alone houses with a median value of $586,721.
Ezzy mentioned, “The downswing has meant buyers who were previously priced out of some markets might start to see opportunities appearing, particularly in cities where larger downturns have been recorded such as Sydney, Melbourne, Brisbane, Hobart and Canberra,”
“However, it’s likely much of the benefits of falling values have been offset, with rising interest rates pushing serviceability buffers and mortgage repayments higher.”
Unit values
In Sydney, 93.2% (272) of the 292 unit suburbs analysed fell over the December quarter. Annually, 95.2% of the suburbs declined, taking the median unit value down to $772,807.
After peaking in April, Melbourne’s unit values dropped by -5.0%. While 78.8% of the inner region declined in value, East and West Melbourne, Southbank and Docklands increased annually by 12.9%, 9.5%, 9.2% and 8.9%.
Brisbane’s unit market also weakened by -1.8% in the December quarter, taking its current median value below $750,000.
Of the 85 unit markets analysed, only 24.7% (21) recorded a decline in values in Adelaide. Annually, only 1.2% fell in the city’s unit value.
Meanwhile, in Hobart, 100% of the 10 markets analysed dropped in the December quarter and 90% over the year.
While Darwin’s house market recorded a decline, the city’s unit market had a 0.2% increase in value. It’s also the most affordable of the capitals when it comes to suburb units as the city has a median value of $382,695.
Canberra’s unit suburbs also saw a -2.0% decline, taking its median value from below $600,000 to $599,937.
Over the three months to December, Perth’s unit values slightly dropped by -1.2%, leading its median value down to $406,621.
Is it a good idea to buy a property in 2023?
It all boils down to your goals and situation. While prices are considerably lower compared to a year ago, interest rates are way higher and expected to peak around 3.85% this year.
You have to consider the trade-off of rising interest payments as the property market is tipped to further fall in the coming months.
While potential homebuyers face a dilemma between high interest rates and cheaper property prices, this can be a great opportunity to buy your home at a price you can afford.
If you’re still unsure, It’s Simple’s managing director, Joseph Daoud, is here to share the 6 important things to do before applying for a home loan:
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