This is a common question people are asking now that the housing markets have transitioned from the once-in-a-generation property boom experienced in 2020-21 to the adjustment phase of the property cycle that could be best described as multi-speed.
After peaking in May 2022, CoreLogic’s national Home Value Index fell by 5.3% over the 2022 calendar year, and while overall the Australian property market is in a downturn, not all of the nation’s property markets are being impacted equally. Each State is at its own stage of the property cycle and within each capital city there are multiple markets with property values falling in some locations, stagnant in others and there are still locations where housing values are continuing to rise.
After remaining virtually flat in February (-0.1%), CoreLogic’s national Home Value Index (HVI) posted the first month-on-month rise since April 2022, up 0.6% in March. Dwelling values were higher across the four largest capital cities and most of the broad ‘rest-of-state’ regions, led by a 1.4% gain in Sydney. This is due to a combination of low advertised stock levels, extremely tight rental conditions and additional demand from overseas migration. The combined regionals index is down 7.7% since June last year, compared with a 9.7% drop in the combined capital cities index, which peaked slightly earlier in April 2022.
Regional housing values remain higher than they were at the onset of COVID across every capital city and broad rest-of-state region.The estimated volume of sales rose by 39.4% in February, which is comparable to February 2021 and 2020, albeit from a lower base compared with when market conditions were stronger. Housing risks remain skewed to the downside, with several factors that could trigger a re-acceleration of value declines over the year. Serviceability of existing home loans may be challenged this year due to increasing interest rates, rising unemployment and a higher cost of living. If the flow of new listings increases in the absence of a rise in buyer demand, housing values may decline.
So what's currently happening to property values in Australia?
As you can see while values in our capital cities grew considerably, the regional property market performed even better during the last property boom. But now we're in the adjustment phase of the property cycle and overall property values are 8% lower than their peak. That's not a property market crash - is it? It's an orderly correction that had to occur after house prices all around Australia got ahead of themselves.
In conclusion:
While the Australian property market is currently in an adjustment phase, it's important to note that not all areas are being impacted equally. With each state and city at its own stage of the property cycle, there are still locations where housing values are continuing to rise. Although housing risks remain skewed to the downside, it's clear that the overall correction was necessary after house prices got ahead of themselves during the recent property boom. With the right information and a strategic approach, there are still opportunities to be found in the Australian property market for those willing to do their due diligence.