Sydney home values slide for first time in 17 months, still crazy expensive
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As expected, domestic interest rates stayed on hold this afternoon at (more or less) zero, and yet here we are – with a bunch of new numbers out of property data firm CoreLogic clearly showing Aussie home values hitting the brakes through February.
And Sydney – that bastion of real estate excess – actually copped its first monthly price slide since 2020.
In February, national home prices rose a paltry 0.6% – that’s the weakest, most Foster’s Light gain in housing values since this whole epic pandemic-driven price action began around 4Q CY2020, CoreLogic said.
The fall is an acceleration on January’s gain of 1.1% – I mean, at 0.6% it’s literally half the growth of just a month earlier. That establishes a quickening decline in growth rates which first began back in April last year.
CoreLogic’s head of research Eliza Owen told Stockhead, the results represent a sharp showdown, as growth rates slid over the month in every capital city.
While that’s true, the weakest February numbers came straight out of the country’s two largest cities – Melbourne prices held steady, while Sydney home values actually fell, shedding 0.1%.
“Despite the broad decline, the market is still clearly led by smaller, more affordable cities, while Sydney home values saw their first drop since September 2020 and Melbourne remained flat over the month.
The summer auction spree has been particularly savage this year, with the record number of listings and auction rates sketching a handy picture of mad keen home-owners rushing to flog their property before rising interest rates start shaving the top off the toppy market. This, Eliza says, also gives buyers more options and reason to be reticent.
“With the cash rate remaining steady, factors including affordability constraints, higher listings levels and a rise in average fixed mortgage rates have contributed to a slowdown in growth over the past few months.”
Still, compared to the major cities, regional property markets are humming.
According to CoreLogic regional house prices are rising four times faster than the combined capital city growth rate (1.6% v 0.4%).
The strong conditions in Brisbane and Adelaide look best through quarterly growth numbers – Brisbane housing values are up 7.2% over the three months to February, while Adelaide is up 6.4% over the same period.
At the other end of the capital city growth spectrum, Melbourne values are 0.2% higher over the past three months while Sydney values have risen by 0.8%.
Home values have been losing steam for the past 11 months really, but the annual growth trend has only just soured, with CoreLogic noting that nationally, home values were 20.6% higher over the past 12 months, down from what Eliza says is likely to be the peak rate of annual growth recorded at 22.4% last month.
With consensus growing around a June or August rate rise, (if not today) the inference is Australia just hit peak property.
Back in November 2020, the real gatekeeper of the Aussie housing market, the Reserve Bank of Australia, crunched the numbers looking to correlate the impact of falling interest rates on the value of your property.
In a quietly terrifying research paper, the RBA concluded that for every 100 basis point or 1% decline in the cash rate, national house values rise by around 30% over a three years.
That’s three years of straight 10% annual gains.