Some housing markets record price slump for first time since pandemic started

Housing markets in some of Australia’s capital cities experienced their first drop in prices since before the pandemic started.

Housing markets in some of Australia’s capital cities experienced their first drop in prices since before the pandemic in what could be a sign that the RBA’s interest rate hike is finally starting to take hold.

Data from PropTrack’s Home Price Index released on Wednesday found that price growth had either flatlined or actually fell “almost everywhere” in the country last month, in May.

Nationally, house prices only faltered by 0.11 per cent, a tiny amount.

However, the report’s authors noted that for some areas it was the first time prices had gone down since 2020.

In Canberra, prices in the ACT were down for the first time in three years.

Although the drops were quite small, the data comes just days before the RBA’s next monthly meeting, where interest rates could rise further. This in turn could drive down house prices again.

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Sydney has slumped for two consecutive months.

Melbourne has dropped marginally in price.

Nationally, annual price growth has fallen from 24 per cent only six months ago to 14 per cent now.

Sydney’s prices fell in May for the second consecutive month.

However, it was still only a very slight amount, a decline of 0.29 per cent.

Melbourne, the ACT and Hobart also recorded slight downward trends, at 0.27, 0.12, and 0.05 per cent respectively.

The report’s author, PropTrack economist Paul Ryan, said that the federal election on May 21 had significantly disrupted the nation’s housing market, however, even without the election in play, real estate prices would have continued to decline.

“Price growth has been slowing for some time,” he noted.

“Conditions have now shifted rapidly from 2021.

“This follows expectations of sharply higher interest rates in 2022, which will erode the affordability of existing prices.”

Adelaide is bucking the trend.

Interestingly, South Australians and regional homeowners are bucking the trend.

But even with capital cities slumping, regional areas are still growing in what is creating a “two-speed housing market”.

Regional Tasmania is up by 0.47 per cent, regional South Australia by 0.34 per cent, regional Northern Territory 0.20 per cent and regional NSW at 0.24 per cent.

The report found that Adelaide continues to experience “strong growth”, with prices going up a further 0.6 per cent in May.

Prices increased by 24 per cent over the past year in Adelaide.

“Adelaide continues to have the most momentum of any city market,” Paul Ryan wrote.