australias property market crash ends
Has Australia’s property market crash ended? December data showed signs of slowing. Image: Canva.
  • Price slump slows, latest Domain data shows.
  • House prices still well above pandemic trough.
  • New house price rises also see sharp decline.

Aussie house prices plummeted as the new year was rung in, but the latest Domain data for December shows a decelerating decline, while this price cycle still remains about $204,000 higher than the mid-2020 trough. This is good news for those waiting to sell, but a tightening deadline for getting a good deal.

January this year kicked off with news from CoreLogic that 2022 witnessed one of the largest house value collapses since the global financial crisis (GFC). The 5.3 per cent decline across the 2022 calendar year was barely a percentage point less than the 6.4 per cent loss in 2008.

Turmoil and record declines

This news came amidst a time of turmoil: eight consecutive rises in interest rates, obscene levels of inflation, a war in Ukraine, worries about a global recession… and the list goes on.

A few days later, more data was released from CoreLogic, finding that Australian home values had their largest-ever decline on record.

The CoreLogic Daily Home Value Index (HVI) recorded a decline of -8.40 per cent as of 7 January this year. This follows the peak on 7 May 2022.

This breaks the record of -8.38 per cent, which occurred between October 2017 and June 2019.

However, while that downturn lasted 20 months, this price fall occurred in less than nine months.

This narrative on declines was reflected in PropTrack’s data around the same time too, read on here.

All of this happened against the mournful backdrop of 9 per cent fewer dwellings approved for the November period (ABS data released on 9 January 2023).

Declines losing steam

Headlining Domain’s latest figures for the December quarter 2022: house prices across the combined capitals are $66,000 lower than the March 2022 peak.

The report found that the real estate downturn in Australia is losing steam, Domain said house prices across our capitals “… declined six times slower and unit prices three times slower than the previous September quarter.”

“The spring selling season bore the brunt of interest rate shocks and sky-high inflation levels. This is why the September quarter saw house prices fall at their fastest quarterly rate,” said Domain chief of research and economics, Dr Nicola Powell. 

The combined capitals quarterly movement in prices

domain december quarter 2022 house price report graph
Source: Domain, powered by APM.

Dr Powell said, “Sellers had been sitting on the sidelines to see how the housing market downturn unravelled and how high inflation and interest rates would land. The low flow of new homes coming on the market throughout spring and early summer has kept overall supply limited despite a drop in the number of sales. This tight supply is helping to keep prices stable.

“Now in the December quarter, the data suggests that the peak rate of the quarterly decline has passed as buyers have had time to adjust to the new norm of rising debt cost and reduced borrowing capacity.

“Based on calculations from Domain Home Loans, those with a $1 million mortgage are now paying almost $1,800 more on their loan than this time last year which has been a hard pill to swallow.

“While lingering weakness has persisted in the property market, the potential end of interest rates later this year will bring in more buyers and sellers, creating some green shoots for the months ahead. That doesn’t discount from an unsettled RBA environment and tight serviceability requirements which will take time for consumers to shake off” she said. 

Capital City Dec-22 Sep-22 Dec-21 QoQ YoY
Sydney $1,413,658 $1,443,265 $1,586,171
Melbourne $1,032,903 $1,025,355 $1,094,051
Brisbane $801,449 $815,874 $810,102
Adelaide $783,705 $781,948 $711,156
Canberra $1,095,587 $1,098,361 $1,165,892
Perth $658,270 $651,207 $623,061
Hobart $737,650 $732,986 $736,776
Darwin $646,835 $626,035 $640,175
Combined capitals $1,008,988 $1,015,893 $1,061,929
Source: Domain

Despite the 6.1 per cent fall in house prices since the March 2022 peak, there seems little solace for those looking for a bargain. There is the aforementioned reduced momentum in price declines, but Domain also noted that prices also remained much higher than during the pandemic trough.

“This price cycle still remains about $204,000 higher than the mid-2020 trough,” said the report.

“The property price falls and the state and federal government support schemes for affordability-challenged buyers, such as the NSW Government First Home Choice Scheme, is going to bring first-home buyers front and centre this year. For this reason, well likely find that unit prices will hold firmer for market entrants as affordability constraints, reduced borrowing capacity, an extremely tight rental market and migration returning will continue to support demand,” said Dr Powell.

New house prices begin to ease

The Australian Bureau of Statistics (ABS) released its latest inflation figures today, the headline annual figure: 7.8 per cent.

That is higher than the previous inflation announcement of 7.3 per cent, made back in October of last year, but there are positive signs on the horizon, according to Master Builders Australia.

The cost of purchasing a new home decelerated sharply with an increase of just 1.7 per cent during the December 2022 quarter. Earlier in the year, new home purchase costs had grown at their fastest pace on record due to increased costs of labour and materials.

“After a period of high inflation off the back crippling labour shortages and high material costs, we are starting to see some easing in the cost of building a home,” said Master Builders Acting CEO Shaun Schmitke.

“As state and federal governments continue to roll out incentives to assist housing affordability, we expect this will help reduce out-of-pocket expenses for Australians and further slow the rate of inflation for new dwellings.

“Master Builders urges the Housing Supply and Affordability Council to look closely around continuity and duplication of shared equity, loans and grant schemes in order to maintain a steady pipeline of housing projects and reduce the cost Australians pay for a home,” said Mr Schmitke.

Overall, annual inflation rose to 7.8 per cent during the December quarter, the highest since 1990. However, this was a little lower than anticipated by the RBA. Inflation is now in the process of easing and this is likely to continue over the course of 2023.

“While we are seeing a slowing in demand for new homes, we recognise the Reserve Bank has a difficult challenge to strike the right balance when curbing inflation.

“It is worth pointing out that interest rate increases are adding to the cost pressures in some parts of the economy. Rental inflation is now at its highest in over a decade as landlords are forced to pass higher mortgage repayments onto tenants.

“Non-discretionary costs such as electricity, labour, land supply and material costs are continuing to have a negative impact on the sector.

“The cost of doing business in the building and construction industry needs to be addressed with bottlenecks in our migration system, unnecessary regulatory burdens on builders and a lack of land supply.

“The industry will continue to work closely with the federal and state governments to tackle these challenges head on,” Mr Schmitke said.

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