Storm Clouds Gather as Perth Value Drops

The winds of change appear to be sweeping across property prices as the first capital city in Australia records a drop in monthly values—and experts predict there will be more cities to fall.

Dwelling prices in Perth fell 0.1 per cent, the city’s first drop in values since June 2020, according to Corelogic’s monthly hedonic home value index.

Brisbane, meanwhile, became the hottest property market in the country with growth at its highest rate in 18 years.

The other capital cities recorded gains, adding to what has been a unprecedented year for the property market with prices up 25.35 per cent, while Darwin has recorded mixed results in the past few months.

However, there were warnings from experts that storm clouds were gathering.

Australian house prices: October

Location Month Quarter Annual Median Value
Sydney 1.50% 5.24% 25.23% $1,071,709
Melbourne 0.99% 3.01% 16.37% $780,303
Brisbane 2.54% 6.50% 22.30% $642,097
Perth -0.11% 0.65% 16.37% $526,625
Adelaide 2.00% 5.86% 20.07% $543,265
Hobart 2.00% 6.66% 28.06% $526,625
Darwin 0.42% 0.41% 19.28% $490,236
Canberra 1.94% 6.18% 25.52% $864,909
Capitals 1.38% 4.41% 20.82% $771,264
Regional 1.87% 5.28% 24.29% $514,308
National 1.49% 4.60% 21.58% $686,339

^Source: Corelogic hedonic home value index for October 2021

AMP Capital chief economist Shane Oliver said they had revised their outlook to a 5 per cent increase in 2022 and a 5 to 10 per cent decline in 2023.

“Storm clouds are starting to gather for the property boom and we expect a further slowing in price gains ahead of falls from later next year,” Oliver said.

“Listings are on the rise, reflecting the end of lockdowns and high prices, and poor affordability is pricing more and more borrowers out of the market.

“A rotation in consumer spending back towards services as reopening occurs may reduce housing demand.

“Higher interest rate serviceability buffers and likely further macroprudential controls will likely slow borrowing, fixed mortgage rates are on the rise and the RBA is expected to start raising interest from late next year.”

House and apartment price changes

City House monthly House quarter Unit monthly Unit quarter
Sydney 1.6% 5.7% 1.2% 4,1%
Melbourne 1.0% 7.1% 1.0% 1.7%
Brisbane 2.8% 7.1% 1.3% 3.3%
Perth -0.1% 0.7% 0.2% 0.5%
Adelaide 2.2% 6.5% 1.0% 1.8%
Hobart 2.0% 6.4% 2.0% 7.7%
Darwin -0.2% -1.2% 1.6% 3.6%
Canberra 1.9% 6.4% 1.9% 5.2%
Capitals 1.5% 4.8% 1.1% 3.1%
Regional 1.9% 5.3% 1.6% 5.4%
National 1.6% 4.9% 1.2% 3.5%

^Source: Corelogic hedonic home value index for October 2021

Corelogic research director Tim Lawless said slowing growth conditions in October were a factor of worsening housing affordability, rising supply levels and less stimulus.

“Housing prices continue to outpace wages by a ratio of about 12 to 1. This is one of the reasons first home buyers are becoming a progressively smaller component of housing demand,” Lawless said.

“New listings have surged by 47 per cent since the recent low in September and housing-focused stimulus such as HomeBuilder and stamp duty concessions have now expired.

“Combining these factors with the subtle tightening of credit assessments set for November 1 and it’s highly likely the housing market will continue to gradually lose momentum.”


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