Over the weekend, Coolabah Capital’s Chris Joye labelled Brisbane “ground zero” of the “unprecedented correction in house prices”, given prices are “falling at a never-before-seen 2% monthly rate, which has accelerated over the past five months”.
The next chart plots Brisbane’s (including the Gold Coast) dwelling values on a monthly basis and shows that the last four month’s price falls are easily the largest recorded this century:
In a similar vein, the next chart plots Brisbane’s current dwelling value decline (shown in black) against prior corrections, using CoreLogic records dating back to 1980:
While Brisbane’s current 7.9% price decline over five months is yet to match the 2010-12 bust (-10.8% over 21 months) or the 2008-09 correction (-8.6% over 10 months), it is easily the fastest on record at this stage of the downturn.
Given Brisbane housing experienced the nation’s largest price boom over the pandemic and values are still 34% above their pre-COVID (end February 2020) level, they have only given back a small fraction of their pandemic gains.
It, therefore, makes sense that Brisbane house prices are retracing sharply in response to the Reserve Bank’s aggressive monetary tightening.
Extraordinary house price booms are typically followed by solid corrections as prices return to reality.
