CoreLogic and ProTrack have released their house price results for May, with both recording their first monthly declines since the beginning of the pandemic.
CoreLogic recorded a national decline in dwelling values of 0.1%, with the 0.3% decline across the capital cities more than offsetting a 0.5% rise across the combined regions:
As we already know, the decline in values nationally were driven by Sydney and Melbourne, which recorded steep falls.
Quarterly price growth has become two-speed across the major capitals:
As well as across the capital cities and regions:
PropTrack’s index shows similar results with a 0.11% decline recorded nationally, led by circa 0.3% declines across Sydney and Melbourne:
It is fair to say that the Australian property correction has begun. How deep it goes will depend on how aggressively and far the Reserve Bank hikes interest rates.
If the median economist is right, and the cash rate lifts to around 2.25%, then expect a heavy correction (circa 15% fall nationally). If the market is right, and the cash rate climbs to around 3.5%, then expect a full on crash (over 20% price fall nationally).
My view is that the RBA will be stopped out much earlier and won’t hike rates nearly as aggressively. If so, then price falls would obviously be lower.
Pass the popcorn.
