On 7 January, the CoreLogic Daily Home Value Index (HVI) recorded a decline of 8.4 per cent from its peak last year, with price falls over the last nine months reaching a record-breaking high alongside expectations that the trend will continue.
Dwelling values previously saw their biggest fall between October 2017 and June 2019 at 8.36 per cent. While the downturn between 2017 and 2019 played out over 20 months, the current housing downturn spanned across only nine months since peaking in May 2022.
The sharp decline comes after an upswing of 28.9 per cent between September 2020 and May 2022, the fastest rise recorded nationally and a high base for housing values to drop from.
Australia’s three largest capital cities were revealed to have the largest weighing on the national HVI. Sydney, Brisbane and Melbourne saw declines of 13 per cent, 10 per cent and 8.6 per cent, respectively.
Meanwhile, Perth dwelling values have fallen less than 1 per cent from a peak in August last year.
Despite Australia’s unprecedented downturn, home values at the end of 2022 were still 16 per cent higher than they were five years ago and 59.8 per cent higher than they were a decade ago.
CoreLogic attributed the recent HVI to be largely swayed by rate hikes, with a reduction of borrowing capacity following a 300-basis point increase in the underlying cash rate over the last eight months.
They additionally projected to see continued increases in the underlying cash rate through 2023, with market expectations pricing a peak of around 4 per cent, while the median forecast from economists is at 3.6 per cent.
Moreover, higher interest costs may be giving rise to dissuasion among potential buyers, the analytics organisation added.
Higher household indebtedness, inflationary pressures, and a post-lockdown surge in spending were found to have eroded household savings and the prospect of a home loan deposit.
Combined with near-recessionary low consumer sentiment figures, prospective buyers are less incentivised to make transactions, CoreLogic explained.
The housing market conditions are expected to remain soft over the next coming months and likely prolong the national housing downturn until interest rates stabilise, they concluded.
