- Australia’s median home price fell for an eighth consecutive month in May, leaving it down 0.4% over the past year.
- Westpac estimates that only a third of Australian homes have seen their value fall over the past year.
- CoreLogic data shows the price weakness has been in the top 20% of the market, largely reflecting declines in Sydney and parts of Melbourne.
Australia’s median home price fell for an eighth consecutive month in May, leaving it down 0.4% over the past year, the first decline seen since October 2012.
From the recent cyclical peak in September 2017, the median price has fallen by 1.1% to $555,274.
However, Australia’s housing market is not one market but many, with much of the recent weakness concentrated in Sydney and Melbourne, the nation’s largest and most expensive cities.
As Tim Lawless, head of research at CoreLogic, noted today following the release of the group’s latest Australian Home Value Index, what happens in Sydney and Melbourne is often influential on national price readings given they are presented in average weighted terms.
“Sydney and Melbourne comprise approximately 60% of Australia’s housing market by value, and 40% by number, so the performance of these two cities has a larger effect on the headline market performance,” he said.
They’re big and expensive, in other words, meaning that movements in values there often mask what’s happening in other parts of the country.
So just how many Australian homes are falling at present? Not many, if the chart from Westpac Bank below is any guide.
It shows the proportion of Australian homes that are rising and falling in value on an annualised basis, based on its estimates.
“Using [the CoreLogic data and] Census figures on dwelling stock as benchmarks, we can generate estimates of the share of dwellings experiencing different rates of price change,” Westpac said in a note released today.
And based off its estimates, only around a third of homes have fallen in value over the past year.
“Currently, a third of all properties are recording price declines with just under 6% recording falls of over 5%,” it said.
“Notably, while the incidence of declines is wider than in 2015–16, the share of properties experiencing rapid declines is somewhat lower.
“The more substantial price corrections in 2010–12, 2008–09, 2004 and 1994–96 saw over half of all properties record annual price declines.”
So while nationwide values have fallen 0.4% over the past year in average weighted terms, it’s only been driven by a small proportion of properties.
Most are still higher than what they were a year ago.
Further reinforcing that point, this great chart from Cameron Kusher, research analyst at CoreLogic, posted on Twitter today shows the breakdown of annual price moments by valuation decile.
Over the past year, it’s only been the top 20% of the market that has seen price falls, masking gains in mid and lower valuations.
As the cities with the most expensive median valuations across Australia, the declines at the top end of the market largely reflect falls in Sydney, and to a slightly lesser degree, Melbourne.