Australia’s housing market lost some steam in May, with national values falling for the first time since 2020, new data revealed this week.
Values continued to rise across most capitals, but the growth was not enough to offset the depreciation in Sydney, Melbourne and Canberra, which pushed the combined capitals index 0.3% lower over the month.
CoreLogic’s Home Value Index (HVI) showed values fell 1.0% in Sydney and 0.7% in Melbourne, while Canberra (down 0.1%) recorded its first monthly decline since July 2019.
Elsewhere, however, growth trends remained positive in May, with values rising 0.8% in Brisbane, 1.8% in Adelaide, 0.6% in Perth, 0.3% in Hobart, and 0.5% in Darwin.
Sydney has been recording progressively larger monthly value declines since February, while Melbourne has fallen across four of the past six months.
Since peaking in January, Sydney housing values are down -1.5%, but remain 22.7% above pre-COVID levels. Comparatively, Melbourne, which experienced a softer growth phase, has recorded a smaller peak-to-date decline of -0.8%, with housing values now 9.8% higher compared to the pre-COVID level.
Canberra, Australia’s second most expensive property market behind Sydney, has experienced nearly three years of consistent positive growth. Accounting for the marginal decline (0.1%) evident in May, Canberra housing values remain 37.9% higher than pre-pandemic levels.
CoreLogic’s Research Director Tim Lawless said despite speculation around the impact of rising interest rates on the property market, last month’s increase to the cash rate is only one factor causing growth in housing prices to slow or reverse.
“It is important to remember housing market conditions have been weakening over the past year, at least at a macro level”, he noted.
With the trend rate of growth easing across most regions over the past year, the annual rate of change has eased sharply over recent months, dropping to 11.7% across the combined capital cities, down from a recent peak of 21.3% over the 12 months ending January 2022.
Whilst continuing to demonstrate stronger growth conditions, regional Australia has also come off peak growth rates Lawless said, with the annual growth trend easing to 22.1%, down from its January peak of 26.1% and likely to trend lower through the rest of the year.
While housing value growth has slowed, rents continue to rise swiftly. Nationally, CoreLogic’s Hedonic Rental Index increased 1.0% in May, taking the quarterly rate of growth to 3.0%, up 60 basis points on a year ago.
The annual change in rents is now tracking at 8.8% across the combined capital cities and 10.8% across the combined regions.
Unit rents are rising at a faster annual pace than house rents across the combined capital cities (where house rents increased 8.6% compared to 9.1% across units) and the combined regional areas (where house rents rose 10.7%, behind the 11.0% gain in units).
