National home prices recorded a mild fall of 0.09% in January, bringing values down 4.51% from their peak in March 2022.
However, despite recent falls, prices nationally are still 28.5% above their pre-pandemic levels. PropTrack’s Home Price Index January 2023 has revealed the price falls were felt across each capital city except Perth (0.06%) and Darwin (0.00%) where they held at peak levels. Canberra (-0.24%) and Melbourne (-0.22%) recorded the largest falls in January.
Home prices in Canberra have recorded both the fastest and deepest decline in more than 10 years. Regionally, home prices in Western Australia have fallen the fastest in January by slipping 0.27%, with regional South Australia continuing to defy the downturn with prices rising 0.46% to a new peak.
PropTrack senior economist and report author Eleanor Creagh (pictured above) said national home prices have fallen for the 10th month in a row, with the substantial cash rate tightening seen in 2022 weighing on home prices in most parts of the country.
“However, the worst of the downturn appears to have passed as the rapid pace of price falls seen in June and July 2022 when interest rates first started rising has subsided and price falls have eased in most capital cities in recent months,” Creagh said.
“A further 25bp rate rise in February, taking the cash rate to 3.35% is widely expected. The continued reduction in borrowing capacities will weigh on prices in the period ahead, though the declines will likely continue at this slower pace as interest rates approach their peak. Home prices may begin to stabilise as interest rate uncertainty reduces later in the year.”
Creagh said Sydney home prices recorded a slight 0.06% fall in January and were down 7.27% over the past year.
“Prices have fallen persistently since March 2022, with Sydney seeing the largest falls of any market and its fastest (but not deepest) price falls in over a decade,” she said.
“As interest rates have risen, home prices have fallen quicker across more expensive regions and property types. However, the magnitude of price declines in Sydney has eased in recent months from the faster pace seen in June and July last year.”
Creagh said Melbourne home price falls eased in January, though they still fell at one of the fastest paces (-0.22%) out of the capital cities in the month.
“Prices are now 5.79% below their January 2022 level and 6.42% below their March 2022 peak,” she said. “Price falls are expected to continue in Melbourne in the period ahead as interest rates continue to rise, further reducing borrowing capacities.”
Creagh said Brisbane prices recorded a slight fall (-0.07%) in January and were now down 0.24% over the past year.
“Conditions in Brisbane have quickly shifted due to the substantial tightening in interest rates seen last year,” she said.
“Prices are now 3.76% below their peak recorded in April 2022, with Brisbane recording its fastest (but not deepest) decline in home prices in more than a decade. However, the magnitude of price declines in Brisbane has eased in recent months from the faster pace seen last year.”
Creagh said Adelaide was the strongest performing capital city market over the past year as home prices fell 0.14% in January.
“Prices are now down 0.21% from their October peak, however, they remain 7.94% above their January 2022 level. The comparative affordability of the city’s homes has seen prices holding up better as interest rates have quickly risen.”
Creagh said Perth home prices recorded a slight increase (+0.06%) in January, with the city continuing to hold up better than other capitals.
“Prices have increased 3.1% over the past year and are just 0.50% below peak levels recorded in October last year.”
Creagh said Hobart home prices fell a slight 0.05% in January.
“Hobart has recorded its fastest (but not deepest) decline in more than a decade, however, the magnitude of price declines in Hobart has eased in recent months from the faster pace seen last year with prices now 1.46% below levels seen in January last year and up 43.9% compared to pre-pandemic levels in March 2020.”
Creagh said Darwin home prices were flat in January, holding out at peak levels, however home prices increased 1.5% over the past year and remained 28% above pre-pandemic levels.
Creagh said ACT prices fell 0.24% in January, with home prices recording both the fastest and deepest decline in more than a decade.
“However, the magnitude of price declines in Canberra has eased in recent months from the faster pace seen mid last year,” she said.
In December, national home prices slipped 0.21%, placing values 2.29% lower compared to 12 months ago. All capitals, except for Darwin and Hobart recorded a drop, with Canberra (-0.43%) and Melbourne (-0.34%) posting the largest monthly declines. Adelaide saw its first monthly price drop post-pandemic.
On January 27, PropTrack revealed the billion-dollar suburbs around the nation - the top suburbs which made it big in 2022 as the property market shifted from 2021’s unprecedented conditions.
“There are still a handful of suburbs that made the billion-dollar club in 2022, but with rising interest rates, home prices experienced nine consecutive months of declines nationally in 2022,” she said.
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