Source : Perth Now news
Sydney home prices are lower than they were five years ago but Australia’s housing downturn has a way to go to return to affordable values.
National median dwelling values fell another 1.2 per cent in October, extending the home price slump to 6.7 per cent since the March peak, data provider Cotality reported on Monday.
In a market already constrained by elevated affordability and serviceability pressures, rising interest rates and higher taxes have further weighed on housing demand.
In Sydney, the market that led the downturn, prices fell 1.6 per cent in the month.
At $1,178,959, the median Sydney dwelling is more than 10 per cent cheaper than the February peak and has dropped below where it was five years ago.
But the mid-sized capitals of Perth and Brisbane are falling even faster.
“We saw such an enormous accumulation of value in those mid-sized capitals over the past five years,” Cotality head of research Gerard Burg said.
“It means when you see these sizeable declines in those markets, they have a lot they can give up, with a lot of home owners not feeling too much direct pain.”
Brisbane’s median value plunged two per cent in October but was still 46 per cent more expensive than five years earlier.
In Perth, where prices were growing at an annual rate of about 25 per cent a few months ago, values fell 1.7 per cent.
In Melbourne, it was a very different story, Mr Burg said.
The Victorian capital has underperformed the rest of the country for five years but is now giving up value more slowly than the other mainland capitals.
Melbourne’s affordability advantage was beginning to attract residents on net, a reversal from the exodus to cities like Perth and Brisbane during the COVID-19 pandemic, Mr Burg said.
Still, Melbourne-based Ray White real estate agent Dexter Prack says the declines are the biggest he has witnessed in his 28-year career.
“Some properties, they’ve gone back to 2017, 2018 prices, which is scary,” he told AAP.
In the prestige Mornington Peninsula market, Mr Prack said some properties were going on the market at a 25 per cent discount.
By exiting a falling market, some investors would have taken a sizeable haircut. But for owner-occupier vendors buying in a falling market, Mr Prack said there were plenty of opportunities.
However, prospective buyers would have to wait for prices to fall further, or for the Reserve Bank to start cutting interest rates, to see affordability really improve.
Nationally, the median dwelling value is worth approximately $63,400 less than in March.
Four interest rate rises have eroded a median household’s borrowing capacity by about $71,000 since February, Mr Burg said.
The Reserve Bank is widely tipped to hike rates again on Tuesday.
With most economists not forecasting a cut until late 2027, Mr Burg expects values to keep falling until then.
