Property prices fall in Sydney, Melbourne: What does it mean?
Is this the beginning of the end or a soft landing?
By looking at the national property price growth in March, you'd think it's the same old story: house prices are still going up and there's no end in sight.
Data from CoreLogic shows that Australian home prices rose by 0.7% between February and March. That was a bigger increase than we saw the month before (plus 0.6%).
But look a little closer and there could be some light at the end of the tunnel. While it's true that the average property price across Australia has gone up (again), prices in Sydney and Melbourne have actually fallen.
From February to March this year, Sydney home prices dropped by 0.2% and Melbourne home prices dropped by 0.1%. These changes might seem small, (and there's still some way to go to offset the annual growth), but it does provide a glimmer of hope.
This is the second month in a row that property prices have dropped in Sydney after they dropped 0.1% in February.
While it's good news for potential property buyers in Australia's 2 biggest cities, the rest of the country is a little way behind.
The overall rise in prices came from strong conditions in Brisbane, Adelaide, Perth and the ACT, as well as certain regional areas that have seen huge population growth.
Brisbane led the way with a 6.4% growth in prices in March. Stock levels in Brisbane are 24% lower than they were a year ago, which is one of the reasons behind the rising prices. So if you're looking for a home in Brisbane, you might be seeing fewer properties and higher prices – not an ideal combination.
What do dropping prices suggest for the future?
Looking at the first quarter of this year, property prices have risen by 2.4% across the country. This adds about $17,000 to the price of each property. However, property prices were growing at more than double that rate a year ago.
So, although property prices have continued to rise in most Australian cities and regions, it does look like momentum has slowed.
Property price growth peaked in the second quarter of 2021 at 7%. In Sydney alone, property prices had grown by 9.3%. In the first quarter of 2022, Sydney property prices had grown just 0.3%.
CoreLogic research director Tim Lawless says that while the monthly rate of growth was up among some cities and regions, there is mounting evidence that housing growth rates are losing momentum.
"Virtually every capital city and major rest-of-state region has moved through a peak in the trend rate of growth sometime last year or earlier this year," Lawless said.
"The sharpest slowdown has been in Sydney, where housing prices are the most unaffordable, advertised supply is trending higher and sales activity is down over the year."
Even if the rest of Australia begins to follow suit with falling prices, there are some markets going against the grain. In Western Australia where borders have recently reopened, Perth's rate of growth is gaining momentum. Regional South Australia is seeing a cyclical high too.
Factors likely to affect property prices over the next year include stock on the market, affordability, interest rates and a return of migration. Some economists have already predicted huge falls in property prices after the RBA increases the cash rate.
