The mythology that home prices always rise has been busted before, because the high-level indices which are the fixation of the media, ignore the real variations, at a granular level.
The latest data from Corelogic shows that at the aggregate level there were small falls in Canberra, Darwin, Hobart, and Melbourne, while there were stronger rises in Brisbane, Adelaide and Perth (especially Perth) and a small rise in Sydney.
But now, the people at Corelogic who release one of the main indicators of prices included in their Housing Chart Pack, the September ‘Chart of the Month’ which takes a granular look at value falls over the three months to August from a quarterly study of 3,655 suburbs across the country and found that house prices in almost one-third (29.2 per cent) had fallen. In comparison, in the three months to August last year prices had dropped in 17.2 per cent of suburbs. They say that Melbourne (79.1%) and regional Victorian suburbs (73.8%) made up the majority of falls over the quarter. Values also decreased across more than half of the suburbs in Hobart (54.3%), Darwin (51.2%), and Canberra (51.6%), while all suburbs in Perth saw values rise over the quarter.
The company said declines were becoming more common as high interest rates as well as cost of living and affordability challenges continued.
So, what’s ahead then? Well of course this depends on the trajectory of interest rates, remembering that the current higher rates have depressed the typical borrowing capacity of the first-time buyer by as much as 40% from just a couple of years back. Inflation in Australia remains significantly higher than in many other countries, so the RBA is sticking to its view there will be no rate cuts anytime soon.
To try and highlight the potential sensitivities of interest rates, we run three scenarios, and look three years out, to illustrate the sensitivities across units and houses by state.
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Today’s post is brought to you by Ribbon Property Consultants.
