CoreLogic has released its full dwelling value results for November, with national values falling by 1.0% over the month and by 3.5% over the quarter:
Every sub-market other than Perth (0%) and Darwin (0.2%) registered value declines in November, with Brisbane and Hobart (both 2.0%) falling the hardest.
Values fell more sharply across the combined capital cities (-1.1%) than the regions (-0.9%) in November; although the roles are reversed when considering quarterly growth rates:
The below table plots the peak-to-trough decline across the various markets and shows that values nationally are now down 7%:
Sydney (-11.4%) is leading the decline, followed by Brisbane (-8.1%) and Hobart (-7.6%). At the other end of the spectrum, dwelling values hit fresh highs in regional SA and WA.
Commenting on the result, CoreLogic’s head of research Tim Lawless noted that “the trajectory of interest rates remains the most important factor for housing market conditions”.
Lawless also notes that if the RBA hikes rates another 0.25% in December, this will take “interest rates to the limit of mortgage serviceability assessments recent borrowers were ‘tested’ on” and “it is reasonable to expect a more substantial rise in mortgage distress, especially when considering the high cost of living pressures”.
Lawless added that “a lift in fixed mortgage rate refinancing activity from Q2 next year adds to the downside risk of higher mortgage distress. The RBA recently estimated around 35% of outstanding housing credit was on fixed term rates, which is higher than normal; historically around 20% of home loans would be on fixed term rates. Further, the RBA expects about two thirds of these loan terms will expire by the end of 2023, with borrowers facing a three to four percentage point rise in their mortgage rate”.
