The most interesting observation from this month’s house price declines is that the property correction appears to have finally spread beyond the big three capital cities of Sydney, Melbourne and Brisbane to Adelaide and Perth.
As at 29 January 2023, dwelling values across Australia’s five major capital cities had fallen by 1%, with all major markets registering declines:
Most interestingly, house price falls across Adelaide (-0.7%) finally appear to be catching up with its big city cousins after holding up well to date.
Perth prices have also fallen by 0.3% so far in January – a sharp turnaround from the 0% and +0.1% results recorded over November and December 2022.
Adelaide’s decline from peak has increased to 2.3%; albeit remains far behind the three big capital cities. Whereas Perth values, which have only fallen 1.0% from peak, continue to hold up well.
Looking ahead, I can see Adelaide home values falling sharply this year for the simple reason that it has experienced by far the strongest (41%) growth since the beginning of the pandemic:
By contrast, Perth values should hold up well given home values are only up 20% since the start of the pandemic, are still tracking 5% below their June 2014 peak, and have experienced little growth since the Global Financial Crisis:
Basically, affordability has become an issue for Adelaide, whereas housing is relatively cheap in Perth.
In turn, interest rate rises are biting harder outside of Perth.
