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PropTrack Home Price Index – October 2022

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PropTrack’s Home Price Index shows home prices across the country registered only a modest decline in October.

After slowing in September, the pace of the decline slowed further last month as the spring sales season kicked off.

Domestic prices fell by just 0.06%, the smallest drop since home prices peaked in March 2022.

Key Highlights of October 2022 Report

Australian house prices fell slightly in October (-0.06%) and are now 3.53% below their peak.

Despite the broad-based price declines in September, the pace of the decline has eased considerably. In October, these price declines eased further, and in some cases reversed.

Melbourne house prices have reversed recent declines, remaining broadly flat (+0.02%) and now 3.45% below October 2021 levels.

Adelaide (0.12%), Perth (0.11%) and Darwin (0.21%) were other capital cities to post positive growth this month, with Adelaide home prices now reaching new peaks.

Download PropTrack Home Price Index – October 2022

Home prices rose in some cities in October as many markets stabilized.Photo: Getty


Hobart (-0.46%) and Canberra (-0.37%) recorded the biggest price drops among the capitals, followed by Sydney (-0.21%). Prices in Sydney are now 5.82% below their October 2021 levels.

South Australia, which rose 0.16% to a new peak in October, continues to buck the recession, along with Tasmania and the Northern Territory, where house prices hit new peaks. Regionally, Western Australia saw the most price declines (-0.15%).

Adelaide and Brisbane remain the best performing capital markets over the past year.

Home prices stabilize in the spring sales season

The pace of house price decline slowed again in October (-0.06%) and is now 3.53% below its peak.

The spring sales season may have had a late start in September, with holidays weighing on activity, but activity typically peaks seasonally in the second half of spring.

The easing (and possibly reversal) of price declines comes with the hope that spring will begin, that sentiment will bottom out, and that interest rates will not rise so quickly from now on.

Further interest rate hikes in the future will increase borrowing costs, reduce maximum borrowing capacity, and further pressure prices.

However, this will be offset by a tighter rental market and rent pressure, a rebound in foreign immigration, lower unemployment and housing supply pressure.

Capital below October 2021 price levels

House prices fell 0.11% across the capital in October and are now below the levels of a year ago.

By contrast, the pace of price declines continues to slow in rural areas. The October price decline stabilized in the provinces, rising just 0.06%.

Over the past year, prices have fallen by 2.08% in the capital, while rising by 6.49% in the provinces.

Demand for more affordable neighborhoods and larger homes will provide downward support, with the result that rural areas will outperform capitals through 2022.

Additionally, conditions remain tough for local buyers, with the number of properties for sale still well below pre-pandemic levels. This means that buyers have less choice and less bargaining power. This is another reason why prices are falling at a slower pace than in major cities.

Melbourne prices stall, Hobart leads decline

House prices in Sydney (-0.21%) fell again in October after a significant drop in recent months. Meanwhile, house prices in Melbourne (+0.02%) stalled in October.

Prices in Sydney are now 5.82% below the level of a year ago, while prices in Melbourne are down 3.45%. Prices have fallen 6.28% in Sydney and 4.75% in Melbourne from their peak earlier this year.

Hobart (-0.46%) led the decline in house prices in October, followed closely by Canberra (-0.37%).

Adelaide and Brisbane continue to be the strongest capital markets, with the slowest pace of price declines, benefiting from the many lifestyle and affordability trends that have boosted the region since the outbreak of the pandemic.

Adelaide was the best performing capital market over the past year (up 14.23%) after prices reversed previous declines and reached a new peak in October, rising 0.12%.

Brisbane house prices are up 7.51% since this time last year, despite a slight drop of 0.09% in October.

The regional SA continues to buck the decline, hitting a new peak in October with prices up 0.61%. Regionally, the state of Washington saw the most price declines (-0.15%).

Home prices fell 0.08% in October, while unit numbers rose just 0.06%. Housing values ​​are declining at an accelerated pace in response to sharp rises in interest rates.

Affordability constraints, shrinking budgets, strong rent growth, and value units on offer have all helped prevent demand from apartment buyers from declining too quickly.

Changing tastes and relative affordability due to pandemic will continue to play a role

South Africa, South East Queensland, New South Wales and Tasmania led the country, with growth of nearly 20% over the past year.

These markets continue to benefit from changing tastes, relative affordability advantages, and migration rates caused by the pandemic. There is still stiff competition in relatively affordable areas.

Looking across the capital, it is clear that the more affordable areas and the peri-urban areas perform better.

Since the outbreak of the pandemic, these neighborhoods have shown strong performance with increased willingness to pay for larger homes, reduced need for commuting.

Outlook

Domestic prices have continued to decline after peaking in March 2022, but the price decline has eased significantly this month as the spring season is underway.

Prices fell just 0.06% in October and are now 3.53% below their peak. However, domestic annual price growth is currently at 0.27%, the slowest pace since 2019.

Total capital prices, as well as prices in Sydney and Melbourne, are below levels of a year ago, with both markets so far peaking and troughing, although the October price decline was not the leading one. continue to lead the decline to

Rising interest rates continue to be the main driver of falling home prices. The RBA has hiked rates at its fastest pace since 1994, and is expected to hike by another 25 basis points in early November.

This has severely constrained borrowing capacity and raised borrowing costs across the country.

Prices may continue to fall throughout the year as interest rates continue to rise, as it will take time for interest rate rises to fully affect prices.

However, prices are likely to find some downward support from positive demand effects caused by tight rental markets and rent pressure, rebounding foreign immigration, low unemployment and housing supply pressure.

The regional market, like Brisbane and Adelaide, has seen a slowdown in price declines since the onset of the pandemic, fueled by shifting lifestyle priorities, migration trends and affordability advantages. So far, these changes have continued to moderate price declines, but a reversal of the pandemic-induced shift in taste poses risks to these markets in the long term.

Rising borrowing costs are a price headwind, but real estate market fundamentals remain healthy.

The Australian economy is strong and the unemployment rate is at its lowest level in 50 years. This should accelerate wage growth and restore borrowing capacity somewhat.

Increased investor activity and rising immigration rates are likely to underpin not only the metropolitan market, but also units, which are currently undervalued relative to housing.

But, as already, the interest rate path remains a key uncertainty, determinant of market conditions and the pace and depth of price declines.

* 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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