A new PropTrack report has revealed regional home prices are falling at their fastest pace since 2011.
Over the last quarter, regional property prices fell 0.34% in August and are down 1.2% over the quarter. Capital city prices fell 0.42% across the board, meaning all capitals are now below their recent price peaks, with Sydney the first and only market to see prices below their August 2021 levels.
The latest PropTrack Home Price Index revealed home prices declined in Hobart (-0.56%), Sydney (-0.49%), Melbourne (-0.47%), ACT (-0.39%), Brisbane (-0.32%) and Adelaide (-0.12%). Only Darwin (0.14%) and Perth (0.04%) saw small price increases in the final month of winter 2022.
PropTrack senior economist Paul Ryan (pictured above) said home prices were expected to continue falling throughout spring as higher interest rates weighed on buyers.
“While we still see strong demand for regional properties, the rapid increase in interest rates is now weighing on home prices all across the country,” Ryan said. “We expect prices will slide lower throughout spring, but regional home prices are still outperforming capital cities, a trend that is likely to continue.”
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Ryan said regional areas were not expected to see price falls to the same extent as larger capitals.
“Regional areas are now falling persistently but continue to be buffered by the affordability and lifestyle appeal that led these markets to outperform over the past two years,” he said. “In the short term, spring will see market activity pick up, despite price falls as buyers and sellers adjust to higher interest rates.”
Ryan said despite the recent falls, prices were still significantly above their pre-pandemic levels.
“Regional areas remain up almost 50% since March 2020 and capital city prices are up 26% over the same time period,” he said. “Although regional areas have recorded their largest quarterly price falls in a decade, the biggest price falls are still in Sydney and Melbourne, with Sydney and Melbourne prices falling 0.5% in August.”
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Ryan said Sydney home prices were now sitting below their August 2021 level.
“This follows persistent price falls since March this year with prices now 4.8% below their February price peak,” he said. “Higher interest rates are affecting the city with the highest price points and most expensive markets so far seeing the largest price falls.”
Ryan said another 0.5% home price fall in Melbourne continued the ongoing trends since early 2022.
“Prices are now at the same level seen a year ago and more than 4% below their peak in February,” he said. “Price falls are expected to continue over the coming months as higher interest rates constrain borrowing capacities.”
Ryan said Brisbane prices were now falling noticeably, down 0.3% in August and 1.2% lower than the peak recorded in May.
“The slowdown in growth means Brisbane prices are up 17% over the past year after recording annual growth rates above 30% early in the year,” he said. “Strong migration flows to south-east Queensland are likely to prevent Brisbane experiencing the largest price falls over the next year.”
Ryan said Adelaide prices fell for the first time this year, down 0.12% in August.
“This is the largest price fall since mid-2019, however, despite this, Adelaide is now the strongest performing capital city market over the past year up 19%,” he said. “Continued relative affordability means we expect Adelaide to see smaller price falls than other markets given typical house values are still below $700,000.”
Ryan said Hobart continued to record significant price falls with prices down 0.56% in August.
“Prices are now 1.7% below the peak recorded in May 2022, however, prices in Hobart remain 10% higher than a year ago,” he said. “We anticipate more significant price falls in Hobart as higher interest rates constrain borrowing capacities.”
Ryan said prices were now falling persistently in the ACT, meanwhile.
“Prices are down 0.39% in August and now down 2.8% from their peak in March,” he said.
He noted Perth had seen mixed results over recent months with prices flat in August and over the past quarter.
“This makes Perth a strong performer relative to most markets as prices have increased by 8% over the past year,” he said.
Finally, he said Darwin prices were up slightly in August.
“Price growth in Darwin has slowed rapidly in 2022 and prices are up by just over 5% in the city across the past year,” he said. “All capitals are now below their price peaks and we expect home prices to continue to fall across the country in 2022 and into 2023.”
