Data from CoreLogic shows that house prices in 327 suburbs nationwide have fallen by at least 10% since the Reserve Bank of Australia (RBA) began increasing the cash rate in May.
Dwelling values in nearly two out of five suburbs in Sydney have fallen by more than 10% versus 22% of suburbs in Melbourne.
CoreLogic research director, Tim Lawless, notes that wealthy “blue chip” suburbs are leading the price falls:
“The sharp declines were skewed towards the more expensive markets, those located close to the water or in a blue-chip inner-city location. In many cases, these were the same areas that recorded a larger than average rise in values through the upswing, which helps to explain the larger decline”.
“Another factor impacting the more expensive markets is simply that as borrowing capacity reduces, there is likely to be a more significant demand-side impact across the upper quartile of the market”.
“We have seen this volatility across the upper quartile of the market through previous cycles, where more expensive housing tends to lead the upswing as well as the downturn.”
The below chart from CoreLogic’s monthly chart pack tells the story:
Top end leads Australia’s housing bust.
Across every capital city market except Darwin, the top 25% of homes by value experienced the sharpest price falls over the September quarter.
This makes sense given these top end markets led the pandemic boom in prices. These markets also tend to be ‘thinner’ and are more sensitive to changes in interest rates.
Therefore, they should continue to fall sharply as the RBA hikes rates before rebounding the hardest in 2024 when the RBA cuts and we are ‘back to the races’.
