New analysis compares home values before and after the rate hikes began
Amid a series of unprecedented interest rate increases over the last two years, new analysis by CoreLogic has shown significant variations in the performance of Australia’s property market across different cities, suburbs, and regions.
The national home value has risen only 2.8% since April 2022, a stark contrast to the significant 31.7% increase in the previous two years.
Tim Lawless (pictured), research director at CoreLogic, pointed out that the minimal capital gains in the last two years are largely due to a 7.5% drop in national values from May 2022 to January 2023. However, since the market’s low point in January 2023, there has been a consistent monthly rise in home values, combining to an 11.1% increase.
“The perception might be that property values are continually increasing, but we can’t forget the short and very sharp downturn that occurred in the immediate aftermath of the first rate increases,” Lawless said.
“Since the market bottomed, there’s been 15 consecutive monthly increases in values nationally, but that performance is not indicative of the entire market. Underneath the headline figure, there’s significant diversity in the housing market’s performance.”
The disparity in housing value changes since April 2022 is evident across major cities. Perth has seen a substantial 25.7% increase in house values, while Hobart experienced an 11.2% decrease. Sydney’s house values edged up by 0.4%, whereas Melbourne’s homes are now 4.2% more affordable than they were two years ago.
“Such a discrepancy in growth rates highlights the diversity of market conditions over the past two years,” Lawless said. “This reflects the complexity within local markets.
“While some cities have exhibited resilience driven by robust economic fundamentals and housing demand, others such as Melbourne, Hobart and Canberra, where housing is more affordable now compared to two years ago, have grappled with factors such as higher supply, affordability constraints, and weaker demographic trends.”
Despite the rate hikes, many Australian suburbs have reached record highs, with 43.6% achieving this milestone by the end of April 2024. The resilience is more pronounced in capital city suburbs, where nearly half or 49.1% peaked last month, compared to 35% in regional areas.
“Demand for housing in Australia remains extremely high in many areas particularly with the added pressure of record high migration levels, persistently tight rental conditions, and an undersupply in dwellings. These figures show buyers are determined to get their foot in the door of home ownership irrespective of rate hikes and the rising cost-of-living,” Lawless said.
In Western Australia, nine of the top 10 suburbs for house value growth over the past two years are located, with Armadale in Perth’s southeast leading the pack with a 60% increase since April 2022. The weakest markets include regions such as Richmond Tweed in NSW, which saw significant declines in house values.
Nationally, 37.9% of suburbs have seen a drop in dwelling values since the rate hike cycle began, with Hobart, Melbourne, and the ACT experiencing the most severe impacts. These areas have faced increased listings and affordability constraints, compounded by subdued demographic conditions.
“The weak conditions over the past two years is in stark contrast to the previous two years where some suburbs recorded a growth spike of more than 90%,” Lawless said.
“The large drop in values can probably be attributed to a combination of a natural correction after values overshot what might be described as fair value, but also the severe weather and flooding events that impacted areas of northern NSW in early 2022.”
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