Home Insights PropTrack Home Price Index – January 2023

PropTrack Home Price Index – January 2023

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The PropTrack Home Price Index shows that the decline in domestic house prices slowed in January, recording a small decline of 0.09%, down 4.51% from its peak in March 2022.

Key Highlights of the January 2023 Report

Australian house prices fell 0.09% in January and are now 4.51% below their peak.

Prices fell in all capitals except Perth (0.06%) and Darwin (0.00%), with Canberra (-0.24%) and Melbourne (-0.22%) recording the biggest declines in January. Since peaking in March 2022, Canberra’s house prices have recorded their biggest and fastest decline from peak in over a decade.

After registering a modest decline (-0.06%) in January, Sydney house prices have fallen steadily since March 2022 and are now down 7.51% from their peak in February 2022. , plummeting more than any other market. Prices in Sydney are now 7.27% below January 2022 levels.

House prices in Sydney are now 7.27% below January 2022 levels.Photo: Getty

House prices fell slightly in Brisbane (-0.07%) and Hobart (-0.05%).

In Sydney, Brisbane and Hobart, house prices have fallen from their respective peaks at the fastest pace in over a decade.

Adelaide house prices fell 0.14% in January and are now just below their peak. However, Adelaide remains the best performing capital city market over the past year. Home prices in rural South Australia recorded their strongest pace of growth in January, the strongest market in the past year, and saw a new price peak in January, rising 0.46%. rice field.

National house prices fall modestly in January

Domestic house prices have fallen for the 10th straight month, with a significant cash rate tightening of 300 basis points last year weighing on house prices in most parts of the country.

But the worst of the recession seems to have passed. The rapid pace of price declines seen in June 2022 and July 2022, when interest rates first began to rise, has subsided and price declines have eased in recent months. Nationwide, the pace of home price declines slowed in January, falling just 0.09%.

While the price decline has eased, it continues to deepen, with prices across the country now down 4.51% from their peak in March 2022.

Nevertheless, national prices are still 28.5% above pre-pandemic levels.

Going forward, borrowing costs will continue to rise as additional interest rate hikes are imminent, further reducing maximum borrowing capacity and weighing on prices.

A significant drop in borrowing capacity means further price declines. Although it is likely that such a slow pace of decline will continue as rates near their peak. If the Reserve Bank pauses its tightening cycle, house prices could start to stabilize later this year as uncertainty diminishes.

Downward pressure from rising interest rates will be offset by positive demand drivers resulting from tighter rental markets and pressure on rental prices, rebounding international migration, accelerating wage growth and sustained long-term housing pressures. There is also a possibility.

The provinces continue to do better than the capital

House prices fell 0.11% across the capital in January and are now 4.68% below levels a year ago and 5.49% below the price peak.

By contrast, the pace of price declines in rural areas continues to slow, with the provinces registering a modest month-on-month decline of 0.03% in January, a drop of 2.54% from the price peak, but prices expected to drop by 2022-1. It continues to rise 0.32% from the level seen in March. In a year-over-year comparison, regional markets outperformed capital markets in all states.

The pace of net domestic migration flows into the region that occurred during the pandemic has eased but remains elevated compared to pre-corona levels. Even if housing market conditions change, these population flows will provide downward support alongside demand for more affordable housing, resulting in rural areas doing better than metropolitan areas. increase.

Moreover, conditions remain tough for local buyers, the number of properties for sale is still well below pre-pandemic levels, and some markets remain highly competitive and home value protected. not.

The good news is that this process has started in recent months, but comparing available inventory in the market to pre-pandemic averages, it is clear that buyers in the region have far fewer options. Home prices are up 12.60% since January 2022, hitting a new all-time high.

Prices in all capitals are above pre-pandemic levels

Prices fell in all capitals except Perth (0.06%) and Darwin (0.00%), with Canberra (-0.24%) and Melbourne (-0.22%) recording the biggest declines in January.

Since their respective peaks, house prices have fallen at their fastest pace in over a decade in Sydney, Brisbane and Hobart. Canberra house prices, meanwhile, recorded the fastest and most severe decline from their peak levels over the same period. Despite this rapid decline from its peak, the decline in house prices in these cities has eased in recent months from the faster pace seen when interest rates first started rising.

The biggest declines were recorded in the more expensive capital cities, with prices in Sydney now down 7.27% from a year ago, and prices in Melbourne down 5.79% over the same period. Since last year’s peak, prices have fallen 7.51% in Sydney and 6.42% in Melbourne.

Brisbane home prices fell 0.07% month-on-month in January, 3.76% below recent peaks. Brisbane prices are below last year’s levels for the first time in the cycle, with January 2022 prices now down 0.24%. level.

However, Brisbane house prices are still up 42.1% compared to pre-pandemic levels. The same applies to all capital and regional counterparts across Australia.

Canberra (-0.24%) led price declines across the capital in January, with Canberra prices now 3.82% below the level of a year ago. Hobart prices fell just 0.05% in January and are 2.88% below their April 2022 peak.

Adelaide, Perth and Darwin are the strongest capital markets in the past year, with a slow pace of price declines, and relatively affordable housing prices offer some insulation. Adelaide was the best performing capital city market over the past year (up 7.94%). Perth’s home prices have risen 3.10% over the past year, outperforming other capital cities after falling just 0.50% from their peak in October 2022.

Home prices fell just 0.06% in January and units fell 0.22%, but from their respective peaks last year, home prices across the country are down 4.81% compared to just 3.00% for units. Home values ​​are declining at an accelerated pace in response to the massive tightening that has been pushed. Affordability constraints, shrinking budgets, strong rent growth, and value units on offer are all preventing demand from apartment buyers from plummeting.

Changing tastes and relative affordability due to the pandemic will continue to affect prices

The regions of Southern Australia, South East Queensland and Rural New South Wales topped the country with nearly 15% growth in some regions over the past year. South Australia is unsurprisingly home, accounting for half of the top 10 fastest growing regions.

These markets continue to benefit from the changing tastes, relative affordability advantage, and changes in migration caused by the pandemic.

Not only has the cost of repaying mortgages skyrocketed as interest rates have risen sharply, but the ability to borrow has declined, making conditions tougher for prospective buyers. With interest rates rising at a faster pace, potential buyer demand and home prices are holding up better in a relatively affordable market.

Looking across the capital, it is clear that the more affordable areas and the peri-urban areas perform better. With an increased willingness to pay for larger homes and a reduced need to commute, these neighborhoods have performed strongly since the outbreak of the pandemic.


With rising interest rates, the housing market has rebounded sharply from last year’s extreme growth and continues to be at the center of the decline in home prices.

After peaking in March 2022, domestic prices fell for the 10th straight month, fell another 0.09% in January and are now 4.51% below the peak. However, the pace of price declines is still significantly slower than the larger declines seen in his June and July when rates first started to rise.

Domestic annual price growth is now at -3.27%, the slowest pace since November 2018, and the substantial 300-basis-point cash rate tightening seen last year is expected to boost home prices in most parts of the country. is pressing

Together with prices in Sydney, Melbourne, Brisbane, Hobart and Canberra, total prices in the capital are below the level of a year ago. Sydney, Melbourne and Canberra continue to lead the peak-to-trough drop so far.

Rising interest rates continue to be the main driver of the decline in house prices, with the current cash rate standing at just 3.1%, with a significant tightening of 300 basis points to date and a near 30% drop in maximum borrowing capacity. increase. There is another 25bp rate hike, and it is widely expected that the cash rate will be his 3.35% in February. With additional interest rate hikes on the horizon, borrowing costs will continue to rise, further reducing maximum borrowing capacity and shrinking buyer budgets.

A significant drop in borrowing capacity means further price declines. Rising interest rates take time to fully affect prices, so if interest rates hit a peak and the Reserve Bank paused, such a slow pace of declines could continue, but there are still a few more to come. It may continue to fall for months. A tightening cycle in the first half of the year is likely to see house prices begin to stabilize as uncertainty subsides.

The downward pressure from higher interest rates should be offset to some extent by a positive demand effect from tighter rental markets and pressure on rental prices, a rebound in foreign immigration, wage growth, and, over time, housing pressures. prize.

Regional markets, and relatively affordable capital markets such as Adelaide and Perth, are seeing the pace of price declines, fueled by changing lifestyle priorities, migration trends and affordability advantages that are still in effect. slowing down. To date, these shifts continue to moderate price declines. Rising borrowing costs are a price headwind, but the pace of price declines may continue to slow in regional markets.

* PropTrack Home Price Index It measures monthly changes in residential property prices across Australia and provides a current view of property market performance and trends. The PropTrack Home Price Index uses a hybrid methodology that combines repeat sales and hedonic regression. Repeat sales match resales of the same property, while hedonic regression estimates values ​​based on those of similar properties. The hybrid model matches two of his properties of the same type within the same Australian Bureau of Statistics Statistical Area 1 (SA1) region and allows control for differences in property characteristics like hedonic regression. The PropTrack Home Price Index is a revised index whose entire historical history is updated monthly with current transaction information.

** This report is realestate.com.au Internal data and data provided by third parties, including state government agencies. At the time of publication. This report provides general information only and is not intended to constitute advice. When citing or referencing this report (or the findings or data contained therein) in a publication, please refer to the report as “PropTrack Home Price Index Report – September 2022”. look report Copyright and legal disclaimers.

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