Recent data shows a decline in property prices across major Australian cities, but the long-term growth trend continues, suggesting only modest improvement in housing affordability.
Property prices have started falling, but the downturn so far pales in comparison to the growth over the longer term and offers only modest improvement to housing affordability. Sydney’s median dwelling value has fallen 1.4 per cent over the past three months, and is now 70.4 per cent higher than a decade ago, CoreLogic figures show.Melbourne’s most-recent downturn began earlier last year, and values are now 6.4 per cent below their peak, but 49.3 per cent higher than 10 years ago.
The long-term gains in Hobart and Canberra also far outstrip the more recent falls, although property values in Brisbane and Perth are still rising, albeit at a slower pace, and hit fresh peaks last month. CoreLogic head of research Tim Lawless said values had been falling recently due to sustained higher interest rates that had limited borrowing capacity for buyers. In Melbourne, the market had also been affected by a weaker economy, the increase in land tax on investment properties and better long-term pace of home building for its population. But Lawless said housing values generally increased over the long term due to an overall shortage of supply of homes compared with buyer demand – even though there had been some dips over the decade, such as when the bank regulator had cracked down on lending and when interest rates had risen in 2022. For potential home buyers, he said the recent falls in value were positive. The typical Melbourne home now costs about $53,000 less than its peak. “That’s definitely not an inconsequential number for a lot of people – a $53,000 decline at a time where incomes have risen is a welcome outcome,” he said.“That is a lot of money, don’t get me wrong. It sounds insignificant compared to the median value, which is about $1.2 million, but it’s a start. I think we’ll see values drifting lower for the first half of the year,” Lawless said. But he acknowledged that values remained high compared with household incomes
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