Is the housing market still dropping in value?

December 13, 2022

If you plan to buy or sell in the new year, you could be fearful of the many clickbait headlines about "plunging" property values, let alone "soaring" interest rates.

But are these headlines actually correct - and if so, are these values still dropping as we race toward a new year?

Let's take a look.

Is the housing market still dropping in value?

In short, no.

In fact, it's really only Melbourne and Sydney that have seen serious declines in property values in 2022.

A good half of our capital cities and most of our regional areas have only experienced very minimal if any, property value declines this year.

Indeed, as 2022 draws to a close, Perth, Adelaide, Brisbane and Darwin's annual property values are still well in the black - with Adelaide property values lifting 13.4%, according to CoreLogic's final Home Value Index report for 2022.

So too are the values in the majority of our regions, particularly that of South Australia (up 18.9% in the 12 months to November) - although regional Victoria and NSW have just avoided the red with an annual uplift of just 1.1-1.2%.

Also important to note is that such was the extraordinary property growth in 2020-2021 that even in Melbourne and Sydney, property prices are still well ahead of their pre-COVID levels in 2020.

As well, it's largely the top end of these markets that have declined, with more affordable areas rising to the fore and enjoying some big wins when it comes to sales activity and buyer demand.

Brisbane and regional New South Wales have seen a similar trend in 2022, which hasn't been helped by some nasty weather earlier in the year.

And finally, from around August this year and onwards, all of these areas have seen a gradual easing in declining values.

Is the housing market still dropping in value?
Change in dwelling values to end of November 2022 - Courtesy of CoreLogic

Facts and Figures of Property 2022

CoreLogic research director Tim Lawless notes that Sydney remains the only city where housing values have fallen by more than 10% - 11.4% to be precise - from a COVID peak of 27.7% in January.

At the same time, the city's property values are still 10.3% above pre-COVID levels in March 2020.

Mr Lawless added that while Melbourne has experienced a "weaker upswing" since its peak COVID growth of 17.3% in February, values could fall to pre-COVID levels by March next year - that is, if values continue to fall at the current pace of -0.8% month-on-month.

Meanwhile, property value declines in Melbourne and the ACT have slowly eased since August, and are no longer accelerating in Brisbane.

And Perth and Darwin markets were "yet to record any signs of a material reversal in housing prices", Mr Lawless said.

“A comparatively healthy level of housing affordability, along with tight labour markets and relatively strong economic conditions have helped to insulate these cities from the downturn so far,” he said.

As well, the apartment market overall has proved highly resilient in 2022, following the trend of buyers snapping up more affordable properties - and fast - in every area.

Keep calm and carry on ....

In his Spring 2022 Price Predictor Index report, real estate analyst and Hotspotting founder, Terry Ryder, highlighted that property growth markets remain abundant in Australia - despite clickbait headlines warning of a widespread decline.

Mr Ryder said his winning capital city property locations for the spring quarter were Perth, Adelaide, and Darwin for the following reasons:

  1. Perth continues to enjoy rising prices, high buyer demand, and busy activity
  2. Adelaide has the strongest market ever recorded in the seven years of Hotspotting's quarterly surveys, with growth across most sectors
  3. Darwin has delivered buoyant sales activity, affordability, and the highest yields in capital city Australia for the fourth consecutive quarter

For his winning regional locations, Mr Ryder mentioned:

  1. Regional Queensland (bar the Sunshine Coast) - led by Toowoomba, Townsville, and Rockhampton
  2. Regional Victoria - an area that "refuses to lie down" and is led by the still-busy Bendigo market, as well as outer-ring Melbourne
  3. Regional Western Australia - led by the key southern centres of Mandurah and Bunbury
  4. Regional South Australia - which while it really gets attention, has affordable "rising market" locations such as Whyalla and Murray Bridge 

.... and don't panic

"What goes up, must come down", is the perfect description of the 2022 property market.

Certainly, interest rates have gone up - but then, we always knew they would (and if we didn't, we should have).

And certainly, many locations have seen declining property values - but this is after two years of massive growth while many more locations are still experiencing price rises and strong sales activity.

Certainly, the property market is cooling and it's a choppy world out there - but it's not crashing either and it's extremely unlikely that we'll see the 17.5% interest rate figure we saw in 1990.

So, as you head into 2023, breathe, stay calm, and don't let those headlines push your property panic buttons!

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