Top-end and inner-city suburbs of Melbourne and Sydney saw a slip in values as higher fixed mortgage rates, affordability, and increased buyer choice impacted values at a granular level, according to fresh CoreLogic data.
CoreLogic’s interactive Mapping the Market tool, which provides an analysis of 3,111 capital city house and unit markets, showed a quarterly decline in values across 23.6% of suburbs, the majority of them in Sydney and Melbourne.
Eliza Owen, CoreLogic head of research, said the quarterly figures confirmed the gradual shift from a prolonged period of broad growth to a multi-speed market that differed between capital cities, regions, and property types.
The CoreLogic March Home Value Index showed a 2.4% rise in national dwelling values in the first quarter of 2022, which is lower than the same period in 2021, when values increased 5.8%.
“High-end and inner-city areas are emerging as the first suburbs to experience this shift in market conditions,” Owen said. “It is likely that slightly tighter lending conditions and higher average fixed rates are hitting the very top of housing markets first. These same areas are seeing some of the bigger jumps in advertised stock levels too, so as we see new demand for housing in these areas decline buyers have more choice, more time for decision-making, and more power at the negotiating table.”
Of the 917 properties analysed across Sydney through the 2022 quarter, 354 (38.6%) posted a decline in value, with more than half of the declines occurring in house markets.
Quarterly value declines ranged from -7.2% for houses in Beaconsfield, 5km south of Sydney’s CBD, to -0.01% for houses in Gladesville on the city’s lower north shore, CoreLogic data showed.
Some 46.8% of the 648 properties analysed in Melbourne markets recorded a slip in values in the three months to March. Declines ranged from -6.4% for houses in the inner-city suburb of Cremorne, to a -0.01% fall for houses in Boronia.
At a broader market level, Owen said Melbourne had seen two monthly market declines in four months and suburb movements confirmed the city was shifting into the downswing phase in its cycle.
“Quarterly declines have been more skewed towards the inner and inner-east of Melbourne, as higher fixed mortgage rates and affordability constraints may be seeing demand slip from the very top end of the market,” she said. “This pattern is mirrored across Sydney, and it’s a pattern that has been observed through previous cycles.”
CoreLogic figures showed that as the housing market cools across Melbourne’s inner city and east, the periphery of the metropolitan is experiencing thriving market conditions. Seeing the strongest quarterly increase of Melbourne house and unit markets, were units in the suburb of Wyndham Vale, at 6.7%.
This surge in more affordable parts of the city, Owen said, could be a result of homebuyers looking for alternatives after being priced out of more central locations.
Unlike Sydney and Melbourne’s softer conditions, Brisbane and Adelaide continue to shine as Australia’s best performers. None of the 651 house markets analysed across Brisbane and Adelaide saw a quarterly or annual decline of values.
In the Brisbane house markets, some of the strongest value gains were south of Brisbane River, which recorded quarterly value increases of around 10% for Acacia Ridge, Capalaba, and Yeronga. Topping the list for Greater Brisbane was Logan Central, where values rose 13.5% in the March quarter.
“Conditions across southeast Queensland continue to be supported by strong interstate migration from those relocating from NSW and Victoria and the relatively affordable housing stock,” Owen said. “For those migrating from the southern states, a typical house in Brisbane was $857,000 in March, significantly less than Sydney’s median of $1.4 million.”
In Adelaide, the strongest quarterly value gains were in Largs North, Ottoway, and North Haven, close to trendy breweries and beaches.
The stellar performance across Adelaide was driven by the high, ongoing demand across the state, positive trends in interstate migration, relatively affordable dwelling values, and low levels of advertised stock.
At the end of March, CoreLogic’s median dwelling value for Adelaide was $602,000, making it the country’s third most affordable capital city behind Perth and Darwin.
In Canberra, 5.2% of the markets analysed saw a quarterly decline in values. The strength of the Canberra market was most evident in the unit segment, where not one suburb saw unit declines over the quarter or year.
Owen credited the strength of Canberra’s unit market to “relative affordability compared to the house segment, as well as increased investor participation in housing markets, as rents rise and units generally offer better gross rent yields.”
CoreLogic’s analysis of 55 properties across Hobart for the March quarter found 10.9% of suburbs recording a decline in values.
Owen said Tasmania’s many tailwinds supported the market for long-term capital growth.
“While migration trends to the state have not been as favourable since the onset of COVID-19, eased travel restrictions may see a more robust return in domestic and international tourism, which would support economic conditions, and likely further tighten the rental market,” she said. “This beautiful state still poses inviting opportunities for retirees and tree-changers, with dwelling values sitting relatively low compared with nearby southern states.”
Across Perth and Darwin, 13.4% and 18% of markets, respectively, saw a quarterly decline. Despite seemingly high instances of quarterly value falls, these markets overall have enjoyed decent value gains in the March quarter.
Across Perth, value gains were strongest in Wannanup units, up 9.3% in the quarter, while the top house market was Forrestdale, with gains of 5.3%, CoreLogic reported.
