Brisbane house prices slumped by 2 per cent in October, a sharper fall than in any other capital and their largest monthly decline on record, CoreLogic’s home value index shows.
But the Queensland capital is yet to feel the full brunt of the downturn experienced in other markets.
Brisbane house prices have plummeted by 2 per cent over the month, the biggest monthly decline on record as higher interest rates and runaway prices dented demand.
Since peaking in June, Brisbane house prices have dropped by 6.2 per cent, Sydney’s have plummeted by 10.2 per cent since peaking this January and Melbourne’s declined by 6.4 per cent since hitting their peak in February.
Sydney house prices dropped by 1.3 per cent during the month and Melbourne by 0.8 per cent, significantly smaller falls than their August declines of 2.3 per cent and 1.2 per cent respectively.
Nationwide, the rate of decline also slowed from 1.6 per cent in August to 1.2 per cent in October.
Despite the smaller price falls across Sydney and Melbourne, it is premature to declare that the worst is over for the housing market, according to Shane Oliver, AMP Capital chief economist.
“I still think it’s way too early to say that we’re nearing the bottom because the impact of past interest rate hikes is still flowing through and we’ve got more interest rate hikes ahead of us,” he said.
“Next year we’re going to see a big slowdown in the economy which will impact not only buyers but also existing homeowners.”
Tim Lawless, CoreLogic research director, said the double whammy of further interest rate increases and surging inflation would stretch household balance sheets well into next year.
“There is a genuine risk we could see the pace of decline re-accelerate as interest rates rise further and at a higher level than expected,” he said.
“We also know that there’s going to be a lot of people moving out of their fixed rate mortgages through early next year, so potentially, there could be a situation where we do start to see some evidence of distress in the marketplace, although hopefully that will be managed or contained by ongoing strong labour markets and a further rise in incomes.”
These uncertainties combined with runaway prices could see Brisbane values falling even deeper into the red in the coming months said Mr Lawless.
“Arguably, what we’re seeing in Brisbane is a catch up, considering the market peaked a lot later than Sydney and Melbourne,” he said.
“Brisbane also had a more substantial upswing of 42.7 per cent compared to Sydney’s 27.7 per cent, so it has a higher level to fall from.
“But I wouldn’t be surprised if Brisbane will fall sharper in the coming months, just like Sydney and Melbourne did at the start of the rate increases, before moderating back to something less alarming.”
Mr Lawless said Brisbane’s housing fundamentals remained sound, however, rising interest rates and soaring house prices have dented demand.
“Listings are still 22 per cent lower than a year ago, so we’re not seeing any evidence of a significant rise in new stock, and interstate migration remained solid, which continues to support housing demand,” he said.
“However, for locals on Brisbane money, so to speak, after such a large rise of 43 per cent in housing values, clearly incomes didn’t rise that much.
“So I think there is some affordability aspect that’s probably contributing to this larger rate of decline.”
The housing downturn has now spread out across the country with every capital city and region except regional SA, posting a decline in value during the month.
Hobart home values fell by 1.1 per cent, Canberra was down by 1 per cent, Adelaide by 0.3 per cent, Perth by 0.2 per cent and Darwin by 0.8 per cent.
House prices across the combined regions are also now weakening faster than the capital cities after outperforming much of the pandemic. Regional house values have dropped by 1.4 per cent, faster than the 1.1 per cent drop across the combined capital cities.
Over the past three months, Sydney house prices have tumbled by 5.3 per cent. It fell by 3.1 per cent in Melbourne and by 5.4 per cent in Brisbane. Hobart slumped by 4.1 per cent and Canberra by 4.3 per cent.
Adelaide, Perth and Darwin were more resilient with values falling only slightly during the same period.
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