- Australian home prices have fallen 2% over the past year in average weighted terms, according to data from CoreLogic.
- The steepest declines have been seen in capital city markets, especially in Sydney.
- However, not all capital city regions have seen prices decline over the past year, with more affordable markets actually registering price growth during this period.
Australian home prices fell for an eleventh consecutive month in August, according to CoreLogic’s monthly hedonic home value index, leaving the decline over the past year at 2% in average weighted terms.
However, that doesn’t tell the full story about what’s going on in Australia’s housing market at present.
As seen in the chart below from CoreLogic, prices have fallen substantially faster in some specific capital city regions over the past year, a stark contrast to price gains seen in other areas.
The regions where prices have fallen the fastest are dominated by Sydney, Australia’s largest and most expensive housing market, where the median price has fallen 5.6% over the past year.
At the other end of the spectrum, those locations where prices have increased the most are all located in more affordable affordable areas.
“The overall housing market weakness is heavily concentrated across the premium sector of the market,” says Tim Lawless, Head of Research at CoreLogic.
“The CoreLogic stratified hedonic index recorded a 5.4% fall in values across the upper quartile of the combined capitals over the past twelve months, while the broad middle of the market is down 0.5% over the year and the most inexpensive quartile has recorded a 0.6% rise in values.
“This trend towards weaker premium housing market conditions is largely attributable to larger falls across Sydney and Melbourne’s most expensive quarter of properties where values are down 8.1% and 5.2% over the past twelve months.”
So prices at the top end of the market are falling faster than the national average, bucking the trend seen in the most affordable locations.
Lawless says the divergence between the two reflects differing factors that are impacting buyer demand.
“In the higher value cities like Sydney and Melbourne we’re seeing typical dwelling prices remain more than 8 times higher than median household incomes, suggesting tighter credit conditions for borrowers with a high debt-to-income ratio will likely impact on demand more in these cities over others,” he says.
“Stronger market conditions across Australia’s more affordable areas are likely attributable to a rise of first home buyers in the market as well as changing credit policies focused on reducing exposure to high debt-to-income ratios.”
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