The latest report from CoreLogic released on Tuesday has shown that Sydney has suffered a 0.1% decline in housing values. It doesn’t sound like a lot, but this is the first time Sydney has endured any kind of loss in the housing sector since September 2020.
This is part of a nationally slowing property market which could signal the end of the crazy rise in prices we’ve seen over the last year when house prices boomed by 25%.
Tim Lawless, CoreLogic’s director of research, said, “Sydney and Melbourne have shown the sharpest slowdown.”
While not extreme, Melbourne is sitting at 0.0% growth. That sounds like it has simply stagnated, that may be true for now, but it has been steadily declining. This is in line with other parts of the country also showing a slowing in the real estate industry.
“The pace of growth in housing values started to ease in April last year, when fixed-term mortgage rates began to face upwards pressure, fiscal support was expiring and housing affordability was becoming more stretched,” said Mr Lawless.
“With rising global uncertainty and the potential for weaker consumer sentiment amidst tighter monetary policy settings, the downside risk for housing markets has become more pronounced in recent months.”
This drop in desire for home ownership isn’t a surprise as interest rates are set to rise, putting every mortgage holder in Australia on edge.
Commonwealth Bank Chief Executive, Mr Matt Comyn said the bank expected slower property growth of 4 -7% this year. Most of that decline would start in the second half of 2022.
By 2023, the Commonwealth Bank predicts a 10% plunge across the nation.
NAB predicted things would be a little worse. They predicted that the property sector would grow at just 2.7%! Sydney and Melbourne would only grow by 1.9% and 1.2% respectively in 2022.
Property prices themselves, according to NAB, would take a turn for the worse halfway through this year and then plummet by 11% in 2023. Both Sydney and Melbourne would drop by nearly 12% in 2023.
NAB executive, Andy Kerr said, “We are seeing house prices ease in 2022 and already we have seen more supply come on to the market. NAB’s forecast is for house prices to remain flat at around 3% in 2022 before a decline of around 10% in 2023. We expect Sydney and Melbourne to experience the largest declines, while Brisbane and Adelaide will likely see less significant drops in house prices.”
The CoreLogic report echoes this sentiment as it noted that Brisbane, Adelaide, and Hobart were recording “stronger” housing conditions than their state counterparts.
Regional areas, however, will still see an uptick as the report states, “Regional Australia continues to record a substantially higher rate of growth than the capital cities. Over the past three months, housing values across the combined rest-of-state regions increased at more than three times the speed of housing values across the combined capital cities”.