How house price drop is impacting your state and the best month to buy

The rate of house price falls has accelerated – but not all the nation’s property markets are being impacted equally.

In recent months, the news for the Australian property market as a whole has continued to go from bad to worse, with falling prices in Sydney, Melbourne, Brisbane, Adelaide and Perth.

The rate of price falls has also accelerated, with prices falling by 1.6 per cent in August.

But not all the nation’s property markets are being impacted equally.

In Sydney, prices are down 9.1 per cent from their highs recorded in February, while prices in Adelaide and Perth have only fallen by 0.6 per cent and 0.7 per cent respectively.

If analysts are correct, this is only the beginning of house price falls, with predictions from mainstream economists and commentators ranging from 10 per cent to 25 per cent down, and with some analysts adding qualifiers that if rates stay higher for longer, prices could fall significantly more.

But the trip down to wherever prices end up bottoming out will not be a straight line. Even in the largest housing crashes in the modern era, there were always moments where the market was stronger than others.

For example, during the US housing crash that accompanied the global financial crisis, the median house in Las Vegas lost over 60 per cent of its value. But due to seasonality, there were moments where price falls moderated from a rate of more than five per cent per month at one point to just 1.4 per cent.

But as the summertime boost to the market faded, price falls accelerated once more, with the market eventually bottoming out almost four years later.

How are various Aussie markets fairing so far?

From the spring selling season following winter to the firing up of the real estate sector after Australia Day, the nation’s various property markets all have their own unique seasonality based on local factors.

For example, in the nation’s largest property market, Sydney, the strongest month for price growth is March. On the other hand, the weakest is in July, during the dead of winter.

With Sydney currently in the middle of its strongest three-month block of the year which runs from September through to the end of November, we could see price falls moderate somewhat based on the seasonal factors that tend to boost the market during this period.

On the other side of the nation in the west, Perth has a completely different seasonal cycle. Perth’s strongest months are February and March.

Meanwhile, in the Sunshine State, the Brisbane market’s strongest months are October, November and December, with August the weakest performing month.

In Adelaide, the strongest months are May, November and December, with August the weakest performing month.

Finally in Melbourne, the strongest seasonality for the market is in March, October and November, with the wintry cold of July driving the weakest time for the market.

Drop in listings

New property listing campaigns have fallen for three consecutive weeks through to September 20. This is quite the departure from the normal seasonal trend, where new listing volumes should be consistently rising.

“I think that may temporarily slow the pace of the downturn, because sellers seem to be withholding a little at the moment, which might not match the seasonal uplift in buyer interest,” said CoreLogic’s head of research, Eliza Owen

After seeing strong growth across all the country’s major markets throughout 2021, the divergence we’ve seen in recent months is likely to continue.

House prices are falling.

“There are also property markets, usually more affordable markets, that tend to lag performance. So in cities like Adelaide, Perth and Darwin, where we are only just seeing prices fall (or in the case of Darwin, prices are still rising), we would expect this is in part a function of a lag, and that these markets will soon see a steeper price fall trajectory,” Ms Owen said.

The outlook

Between the impact of seasonality and homeowners increasingly reassessing whether or not to list their homes, we may see the pace of price falls in some markets moderate.

On a longer-term time horizon, it’s anyone’s guess. Plenty of forecasters have been wrong about the Australian property market over the past five years, some to the upside and others to the downside.

With so much in the world in flux, from the explosive sabotage of the Russian Nord Stream gas pipeline to British pension funds driven to the brink of insolvency, it’s impossible to know how it will all play out.

While there are certainly more than enough local factors to drive the direction of the market, these external factors may end up helping to decide the fate of Australian interest rates and our nation’s property market.

Tarric Brooker is a freelance journalist and social commentator | @AvidCommentator