The largest house price falls in Australian history
As price falls spread to a larger and larger share of Australia’s housing markets, commentary continues that the nation could see the largest housing price falls on record. Perhaps one of the most notable sources of housing price data comes from Cotality, which has analysed housing price data going back well over 40 years. And The post The largest house price falls in Australian history appeared…
The latest housing market data from Cotality reveals that Australia may be on track to experience its largest ever housing price decline. Over four decades of records, the recent downturns appear to be unprecedented. At the national level, the average dwelling price index has dropped by a significant 3.5% since its peak. While Sydney experienced the most substantial decrease at 6.2%, Perth showed the least decline at just 0.9%.
However, the disparity between cities is not solely due to timing, with most capital cities seeing larger declines than the average. For instance, Sydney's worst correction came between 2017 and 2019, with prices dropping 12.9%, while Melbourne faced a 9.7% fall during the same period. Brisbane's worst decline occurred between 2010 and 2012, with prices dropping 9.9%.
Surprisingly, Adelaide has had the smallest historic price declines, mainly because it had some of the lowest-priced capital city real estate prior to the current cycle. In terms of the most severe declines, Perth led with a 15.3% drop between 2014 and 2019. As the housing market remains one of the most expensive and least affordable in Australia's history, it's plausible that new records may be set in the near future.
However, historical cycles show that policymakers' roles become crucial in such scenarios. Past examples reveal that Sydney and Melbourne bottomed out around the time of the 2019 election, when a more pro-property investor Coalition government was elected, and interest rates were subsequently cut by the RBA. Similar timing patterns were observed in Perth, Adelaide, and Brisbane during previous rate-cut cycles.
Moving forward, the RBA's actions are currently constrained by rising inflation and their policy target, while the Albanese government faces a challenging fiscal environment. Despite these challenges, there is still hope for intervention if prices decline significantly enough, though the threshold for such intervention remains to be determined.
Written by urgent.news from MacroBusiness's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
