What does inflation mean for the Australian housing market?
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  • 2,405 Australian house and unit markets are in decline as of the September quarter
  • Values are now below the levels recorded during the same time last year across 38.3% of markets
  • All suburbs analysed by CoreLogic have declined in value

Data released by CoreLogic via their Mapping the Market interactive tool has revealed that 79.5%, or 2,405 house and unit markets, saw values go backwards during the September quarter. It is a significant increase on Q2 when 1,293 markets recorded a decline.

This saw values in 38.3% of house and unit markets fall below the levels recorded during the same time last year.

CoreLogic Economist Kaytlin Ezzy said the updated data confirms the scale of the housing market downswing, which has been led by six consecutive cash rate hikes.

“This analysis shows the effect of the three 50 basis point rate hikes through the September quarter, plus the lagged impact of the first two hikes (totalling 75 basis points) in May and June, so it’s not surprising to see significantly more markets recording a decline in value,” she said.

“The CoreLogic Home Value Index showed dwelling values across the combined capitals declined -4.3% over the September quarter, down from a -0.8% decrease recorded over the three months to June.

Kaytlin Ezzy, CoreLogic

Kaytlin Ezzy
Kaytlin Ezzy Image – CoreLogic

“Across the capital’s house markets, Sydney, Melbourne, Canberra and Hobart each saw 100% of analysed suburbs experience a decline in values over Q3, with Hobart the only city also recording a quarterly decline in all unit markets analysed. m

“Darwin, Perth and Adelaide had the lowest portions of house and unit markets experiencing quarterly declines, which is a reflection of those cities reaching their peak a little later in the cycle than the larger capitals. Unsurprisingly, Sydney and Melbourne also have the highest share of house and unit markets recording an annual decline in values.”

Sydney weaker

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Ms Ezzy noted that growth conditions across Sydney have weakened significantly, with house values falling by -9.7% since April and -7% over the past quarter. This takes values to -6.4% lower than this time last year.

All 563 suburbs analysed by CoreLogic saw house values fall over Q3, but Ms Ezzy said the pace of decline varies between suburbs.

“The rate of quarterly decline ranged from a -13.0% fall in Asquith to a -0.8% drop in Silverdale. The recent declines saw the median house value across 34 suburbs fall below $1m over the past quarter. Additionally, house values in 72.6% of suburbs are now below the levels recorded this time last year,” she said.

“Continuing the trend seen across Sydney’s house market, quarterly value declines became more widespread across Sydney’s unit market, with only 13 of the 304 markets analysed recording a rise in unit values over the quarter.

“These resilient unit markets were concentrated in the city’s South West and Blacktown regions, as well as Rushcutters Bay (where values rose 0.6% in the quarter) and Sydney (where values held steady) in the Inner City region.

“As values continue to decline, the portion of suburbs recording an annual decline in unit values also increased, from 12.7% in June to 69.7% over the 12 months to September.

Melbourne house values down by 4.2%

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CoreLogic’s data revealed that house values in Melbourne declined by – 4.2% over the quarter, and now -4.9% over the year. The median value is $937,131.

Like Sydney, all suburbs in Melbourne saw a quarterly decline in value. 27.5% of suburbs recorded a fall greater than -5%.

74.3% of suburbs are now weaker from the same time last year.

“The number of suburbs with a median house value above $3 million has fallen, from six in June to four in September, while the count of house suburbs with a median below $750,000 rose to 71. Unit values in Melbourne have also deteriorated over the quarter, with 88.4% of the 251 unit markets analysed recording a fall in values in Q3,” Ms Ezzy said.

Brisbane in negative territory

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Even the Sunshine State is not immune, with with Brisbane recording house value decline of -5.1% during the quarter. Just 5.7% of suburbs analysed saw values rise; 15 on Ipswich and four in Logan – Beaudesert.

However, only two suburbs recorded a decline in house values compared to the same time last year – Chermside (-18%) and Fairfield (-0.3%).

Despite the significant growth over the past two years, 70.5% of Brisbane’s house markets have a current median value below $1 million, with 11% under $500,000.

In regards to the unit market, unit values rose just 0.4% during the September quarter, following a 3.5% rise during the June quarter. 46.7% of the 169 suburbs analysed recorded a quarterly decline in values, up from 5.6% in June. None of the suburbs analysed saw unit values decline over the 12 months to September.

Adelaide down 0.5% from July peak

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The South Australian capital has witnessed a 50% in home values since the onset of Covid. The median value is around $705,000, a rise of $225,000.

However, Adelaide is also not immune to rising interest rates, with values now -0.5% below the July peak.

“Over the last quarter, 48% of house markets in Adelaide saw values fall, while no suburbs recorded an annual decline in values,” commented Ms Ezzy.

“Adelaide’s unit market remains the strongest out of the capitals, with quarterly growth in unit values at 2.4%, but down from a recent peak rate of 4.9% over Q2. Of the 95 unit markets analysed, 11.6% saw values fall over the quarter, while only one recorded a decline in values over the year.”

Perth remains the cheapest capital city for houses

In Perth, house values declined by -0.5% during the September quarter. This takes Perth’s median house value to $584,941, making it the most affordable capital city. 

More than half of the 288 housing market recorded a decline over the quarter, with 9.7% seeing values form a year ago.

19.8% of house markets have a median above $1 million, with 26.4% below $500,000.

Other markets…

Hobart is the only capital city to record a decline in all house and unit markets over the September quarter, at a rate of -4.3% and -5.3% respectively.

Median house values Darwin bucked the trend, with house and unit values increasing by 1.4% over the quarter. Of the 37 house markets analysed, only 13 saw values fall during the quarter.

Canberra saw median house values fall by -5.2% in the September quarter to $1,009,575. All 85 suburbs analysed recorded a decline during the quarter. Year-on-year, 27.1% of house markets saw a fall year-on-year.

“Unit values declined in five suburbs over the quarter, while no suburbs recorded a year-on-year decline. Darwin remains Australia’s most affordable capital to buy a unit in, with a median value of $377,432,” Ms Ezzy concluded.

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