What does a change in dwelling value mean?

Most of the time, well almost always, when you hear about a change in dwelling values,  it reflects prices achieved at sale.

Homeowners often misinterpret what this means to them.

Many think, that if say, the median value of dwelling sales fell by say 5% over the past twelve months (for example), that their home is worth 5% less.

Yet, over the past twelve months, there were about 490,000 dwelling sales across the country, which represents a turnover of about 4.5% of Australia’s dwelling stock, which as of March this year totalled just over 11 million homes.

On average, over the past decade, about 5% of Australia’s dwellings sell each year.

It fell to just under 4% during the initial Covid period and rose to 6% in late 2022 (the last housing market peak).

So, when the various housing price results are released, they firstly are based on the price achieved at sale compared to a corresponding previous time frame plus, secondly, they are based on a small proportion of the total dwelling stock.

Change in value based on sales activity

Table 1 and Chart 1 show the most recent ‘full’ results of this nature – that is a change in value based on sales activity.

This suggests that dwelling values fell by 7% across our capital cities over the past twelve months and they didn’t move much apparently across the regional markets when the results are compiled into one value.

Across the country, using the sold method, housing values fell by $34,250 to $665,000 median price or down -4.9% when compared to twelve months ago.

Yet there is another way to measure what is happening with housing values and this involves a price estimate across all dwellings, not just those that have sold during a survey period.

Most recent dwelling value estimates for all dwellings by state or territory across the county

See Table 2 and Chart 2 for the most recent dwelling value estimates for all dwellings by state or territory across the county.

This indicator suggests that all dwelling values fell by just -3.7% over the past twelve months.

Revisit Table 2.

Chart 2 shows that the estimated average value of all dwellings across the country is currently $896,000, which is down from $930,600 in March last year.

Final note...

For mine, the all dwellings results, are more meaningful to far more of us – especially those that aren’t looking to sell in the near future, than the narrower sales results.

Moreover, the RBA and the banks should be using all dwelling indicators during the deliberations and assessing financial matters.

About Michael Matusik Michael is director of independent property advisory Matusik Property Insights. He is independent, perceptive and to the point; has helped over 550 new residential developments come to fruition and writes his insightful Matusik Missive