CoreLogic’s daily dwelling values index, which measures price changes across the five major capital cities, fell another 0.23% in the week ended 2 February. This was the 39th consecutive weekly decline at the 5-city aggregate level:
Values fell sharply across Sydney (-0.24%), Melbourne (-0.30%), Brisbane (-0.26%) and Adelaide (-0.20%), but were flat in Perth:
The pace of decline remains swift at the 5-city aggregate level, with values down 3.3% over the quarter. This quarterly decline has been driven by Brisbane (-4.4%), Sydney (-3.9%) and Melbourne (-3.1%):
Finally, home values have declined 9.9% from their peak at the 5-city aggregate level, led by Sydney (-13.9%), Brisbane (-10.7%) and Melbourne (9.4%). By contrast, Adelaide (-2.3%) and Perth (-1.0%) have experienced only minor falls:
Interestingly, capital city dwelling values have fallen at a stable rate of between 0.2% and 0.3% per week for the better part of four months. And if this pace of decline is maintained, then home values at the 5-city aggregate level will be around 15% lower than peak by the end of June.
Given the Reserve Bank of Australia (RBA) is certain to lift the official cash rate again on Tuesday, and the possibility of more rate rises in coming months, Australian home values are likely to continue falling for the foreseeable future.
For what it is worth, I expect the Australian economy to weaken significantly over the first half, which then will prompt the RBA to commence a rate cutting cycle in the September quarter in a bid to stave off recession.
These rate cuts will then usher the beginning of another house price upswing late in the year.
