Australian home prices have fallen for 10 consecutive months, including 0.6% in July, leaving prices down 1.6% over the past year in average weighted terms.
However, Australia is a big place with many individual markets, meaning a nationwide figure doesn’t reflect price trends seen across individual markets.
In some locations prices have been falling significantly faster, and longer, while others aren’t seeing prices fall at all.
That’s demonstrated perfectly in the two charts below that come courtesy of CoreLogic.
The first shows the real, inflation adjusted change, in home values since the most recent cyclical peak in each Australian capital city.
The second shows the number of quarters that real home prices have been falling in each of these markets.
Clearly, the recent nationwide trend is not indicative of what’s been seen across the country with real values falling significantly longer, and more, in many smaller capitals from the top of the price cycle.
In contrast, real values in Sydney and Melbourne — the two capitals that have dominated the housing headlines this year — have only really started to decline within the past 12 months.
“Value declines in the two largest cities are a relatively new occurrence and given it is occurring from a back-drop of significant increases over recent years it could be many years before we see real dwelling values returning to their previous peak,” says Cameron Kusher, Research Analyst at CoreLogic.
“In previous downturns for Sydney and Melbourne, real value declines have been large and they have taken a long time to eclipse their previous peaks.
“After real dwelling values peaked in Sydney in December 2003 they fell 18.4% to December 2008 and didn’t eclipse their previous peak until June 2014.
“In Melbourne, real dwelling values peaked in June 1989 and fell by 24.3% to December 1995 and didn’t eclipse their June 1989 peak until September 1999.”
Aside from suggesting declines in Sydney and Melbourne could decline for some time yet, at least if history is a guide, the charts also suggest that real returns from housing — regardless of location — have not been all that great in recent years, especially when holding costs are taken into consideration.
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