‘Falling persistently’: Australian house prices slump

In just a few short months, house prices across Australia have taken a huge dive with the news only getting worse for homeowners.

Australian house prices have fallen by 2.7 per cent nationally since their peak and any rises from early 2022 have all but disappeared, new research has showed.

In August, houses prices across Australia fell by 0.39 per cent but regional areas have been hardest hit by rising interest rates with prices plunging at their fastest pace since 2011, PropTrack’s latest Home Price Index released on Thursday showed.

Sydney prices continued to drop by 0.49 per cent, but have experienced a dramatic drop in particular in the past six months.

“All capital city markets are now below their price peaks, with Sydney prices down 0.87 per cent compared to August 2021, making it the only capital city to see a decline over the year,” said report author and PropTrack senior economist Paul Ryan.

“This follows persistent price falls since March this year, with prices now 4.8 per cent below their February price peak. Higher interest rates are affecting regions with the highest price points and Sydney – the most expensive market – has so far seen the largest price falls.”

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The Sydney market has been hardest hit by price falls. Picture: David Swift/NCA NewsWire

In Melbourne, house prices fell by 0.47 per cent in August, continuing the trend since the start of the year.

“Prices are now at the same level seen a year ago, and more than 4 per cent below their peak in February,” Mr Ryan said.

“Price falls are expected to continue in Melbourne over the coming months as higher interest rates constrain borrowing capacities.”

One capital city that had managed to avoid falling house prices has now been hit.

Prices in Brisbane had fallen “noticeably” down 0.3 per cent in August and were 1.2 per cent lower than the peak recorded three months ago.

“The slowdown in growth means Brisbane prices are up 17 per cent over the past year after recording annual growth rates above 30 per cent early in the year,” Mr Ryan said.

“However, prices remain almost 50 per cent higher than in March 2020. Strong migration

flows to South East Queensland are likely to prevent Brisbane experiencing the largest

price falls over the next year.”

Brisbane price growth has slowed down. Picture: John Gass/NCA NewsWire

Meanwhile, Adelaide experienced its first decline in prices for the first time this year – down by 0.12 per cent and the largest price fall since mid-2019.

“Despite this, Adelaide is now the strongest performing capital city market over the past year, up 19 per cent, with regional SA the only stronger market nationwide,” Mr Ryan said. “Continued relative affordability means we expect Adelaide to see smaller price falls than other markets, given typical house values are still below $700,000.”

Hobart experienced the biggest price fall across the nation suffering a whopping 0.56 per cent drop, while in the ACT prices fell by 0.39 per cent.

Darwin prices were up slightly in August but price growth has slowed rapidly in 2022 and prices are up by just over 5 per cent in the city across the past year, the report revealed.

PropTrack economist Paul Ryan. Picture: supplied.

Combined regional areas fell 0.34 per cent in August and have now fallen 1.2 per cent over the past three months – the greatest quarterly fall since 2011.

“Despite recent falls, prices are still significantly above their pre-pandemic levels,” Mr Ryan wrote. “Regional areas remain up almost 50 per cent since March 2020. Capital city prices are up 26 per cent over the same time period.”

House prices are expected to continue to fall this year and in 2023. Picture: Gaye Gerard/News Corp/Daily Telegraph

But Mr Ryan said they expect house prices to continue to fall across the country in 2022 and into 2023.

“Regional areas are now falling persistently but continue to be buffered by the affordability and lifestyle appeal that has led these markets to outperform over the past two years,” he said.

“In the short term, spring will see market activity pick up, despite price falls as buyers and sellers adjust to higher interest rates.”

However, economists are predicting Australia’s house prices will rise again in 2024 after a slump coming out of the pandemic, warning buyers in big cities to prepare for another spike.