Australian house prices have recorded a seventh monthly decline, property research group Cotality said, with the national Home Value Index falling in October and bringing the cumulative drop from the March peak to 6.7%. The median Australian dwelling has lost approximately $63,400 in value since March and now sits at $884,855, ABC News reported.
Capital city values have fallen 8.1% over seven months. Sydney prices dropped 1.6% in October, extending the decline from the February peak to more than 10% and pushing the median dwelling value to $1,178,959, below where it stood five years ago.
Brisbane's median value fell two per cent in October but remains 46% higher than five years ago, while Perth values declined 1.7%. Suburbs across almost all areas of Brisbane, Perth and Adelaide recorded falling values over the three months to October.
Gerard Burg of Cotality said the rate at which values are declining is outpacing every previous housing downturn recorded over the past 40 years. A median household's borrowing capacity has been reduced by about $71,000 since February as a result of four interest rate rises, according to Burg.
Cotality attributed the weakness in buyer demand partly to higher interest rates making it harder for buyers to obtain loans, and partly to federal government budget changes to property tax breaks reducing investor appetite. The Reserve Bank was widely expected to raise rates again after the data release.
Melbourne-based Ray White agent Dexter Prack, describing the declines as the largest in his 28-year career, told AAP that some properties had returned to 2017 and 2018 price levels. Prack said some properties in the prestige Mornington Peninsula market were being listed at a 25% discount. He said owner-occupier vendors selling into a falling market could find plenty of buying opportunities.
Burg said large accumulated gains in Perth and Brisbane over the prior five years meant many homeowners in those cities were not yet feeling significant financial stress from the falls. He expects values to keep falling until late 2027, in line with most economists not forecasting a rate cut until that time.
The reduction in borrowing capacity of about $71,000 since February directly limits what a median household can borrow to purchase property. Buyers seeking to enter the market or trade up may find more options available as prices fall, though sellers exiting the market may incur significant losses.
Reporting: ABC News, The Nightly
Written by Pick & Scroll News from the reporting and documents linked above.
