Reality bites as Aussie house prices continue falling

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Anybody hoping for Australian house prices to stabilise in early 2023 will be disheartened by the latest data from CoreLogic’s daily dwelling values index.

After two consecutive weeks of moderating home price falls over the holiday period, value losses across the five major capital city markets accelerated in the week ended 12 January to -0.27%:

weekly house price movements

This chalked up the 36th consecutive weekly house price decline, which began immediately after the Reserve Bank of Australia’s (RBA) first interest rate hike in early May 2022.

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This week’s decline was again driven by the three largest capital cities of Sydney (-0.35%), Melbourne (-0.22%) and Brisbane (-0.35%):

weekly house price changes

On a quarterly basis, home values continue to fall at a rapid pace, down 3.3% at the 5-city aggregate level. Brisbane (-4.8%) continues to lead the way, followed by Sydney (-4.0%) and Melbourne (-2.8%), whereas Adelaide (-1.0%) and Perth (-0.1%) continue to buck the trend:

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quarterly house prices

Home values have now fallen 9.2% from their peak at the 5-city aggregate level, led by Sydney (-13.2%), Brisbane (-9.9%) and Melbourne (-8.7%):

change from peak
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My expectation is that 5-city aggregate dwelling values will fall on average by 1% per month all the way to the third quarter of this year.

Then the RBA will cut rates and prices will start to rise before the end of the year.

The downside risk is that the fixed rate mortgage reset will cause a wave of forced sales that will drive house prices down even further. So that is something that should be watched closely to see how it unfolds.

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Either way, the national housing market has already recorded its biggest fall on record. And in a matter of months, several key markets like Sydney, Melbourne and Brisbane will also record their biggest ever losses.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.