Key takeaways
Proptrack's market insight showed that Australian home prices fell again in September, down 0.19%, and are now 3.4% below their peak.
Prices continued to decline in Sydney (-0.18%) and Melbourne (-0.29%).
Sydney prices are now 3.7% below their September 2021 level, with Melbourne prices down 2.1%.
While price falls were widespread in September, the pace of price falls moderated significantly.
National prices were down only 0.19%, the smallest price fall since national prices started to fall in April 2022.
Despite recent falls, prices are still significantly above their pre-pandemic levels.
It's no real surprise that the PropTrack Home Price Index shows that home prices continued to fall across the country in September.
However it was the smallest decline since prices began slipping in April.
Sydney and Melbourne prices fell only 0.18% and 0.29%.
And of course not all the nation’s property markets are being impacted equally.
Each State is at its own stage of the property cycle and within each capital city there are multiple markets with property values still rising in some locations while others are stagnant or falling.
Here are the key highlights from the September 2022 Proptrack Home Price Index report:
- Australian home prices fell again in September, down 0.19%, and are now 3.4% below their peak.
- Prices continued to decline in Sydney (-0.18%) and Melbourne (-0.29%).
- Sydney property prices are now 3.7% below their September 2021 level, with Melbourne property prices down 2.1%.
- While price falls were widespread in September, the pace of price falls moderated significantly. National prices were down only 0.19%, the smallest price fall since national prices started to fall in April 2022.
- Regional South Australia and Tasmania continue to defy national falls, hitting a new price peaks in September. Adelaide, which was the last capital city to record a price fall this year, is the strongest performing capital over the last year.
- Despite recent falls, prices are still significantly above their pre-pandemic levels.
- Regional areas remain up almost 50% since March 2020.
- Capital city prices are up 25% over the same time period.
Proptrack chief economist Paul Ryan explained:-
This moderation in price falls does not herald the end of declines; interest rates have continued to increase and expectations of a hike in early October will push prices lower throughout spring.
Combined capital city markets have now retraced all of their gains in late 2021 and early 2022 to be back to the same level a year ago.
By contrast, regional areas are still 9% higher than their level a year ago.
These parts of the country have benefited from relative affordability and preference shifts towards lifestyle locations and larger homes following the pandemic.
These factors have buffered the regions, as well as the more affordable capitals of Brisbane and Adelaide, from the largest price falls so far.
Outlook
Proptrack chief economist Paul Ryan explained:-
So far, prices are down 3.4% from their peak, and by more than 5% in Sydney and 4.9% in Melbourne.
Combined capital city prices are now back to their level a year ago.
Interest rate increases continue to be the crucial driver of home price falls.
The RBA has raised rates at the fastest pace since 1994, with a further 50 bps increase expected in early October. This is significantly constraining borrowing capacity and increasing borrowing costs across the country.
It will take time for these higher interest rates to fully affect prices, so they are likely to continue to fall throughout this year and into the next.
Interest rate effects will overwhelm the positive demand effects from stronger wages growth and immigration that we expect over the coming year.
But buyers and sellers over the spring selling season will be waiting for the RBA to reveal the pace of interest rate increases over the rest of the year as it will be key for the extent of prices falls this year.
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