South East Queensland Property Price Drop
With the month of August now completed, we have access to a considerable amount of data and news articles that focus on the property market. Whilst many of these stories we will feature throughout the week, our lead story last week comes from the latest Corelogic research that discusses the fact that some parts of Australia are now seeing property values falling by around $1000 per day.
Up until the start of August, it was thought that Sydney and Melbourne were seeing the largest price falls. Unfortunately for us here on the Gold Coast, news now coming through from Corelogic shows that some of the largest property price falls are being seen in South East Queensland. This includes the Gold Coast.
The findings from the Corelogic report for the month of August are below.
House values falling nearly $1000 a day as RBA warns of ‘uncertainty’ ahead…
House values in some parts of the country are falling by almost $1000 a day as the Reserve Bank’s war on inflation sweeps across the nation’s property market, amid warnings prices will continue to drop as long as interest rates are pushed higher.
Data released last Thursday by CoreLogic shows values falling through August in every capital city except Darwin, led by Sydney suffering the biggest drop in the nation at 2.6 per cent.
It was the fifth consecutive monthly fall for the Sydney market, taking the median value since the end of April down by $114,000 to $1.3 million, a reduction of $927 a day.
The situation is similar in Melbourne, where house values fell another 1.5 per cent in August to be down 4.4 per cent over the past three months. Melbourne’s median house value has fallen by more than $51,000 over the same period, or $415 a day, to $949,000.
In August, one of the biggest hits to values was in Brisbane, which along with Adelaide and Perth had previously defied the recent property market cooling. Brisbane house values slipped by 2.1 per cent in August, although they are still up by 18.1 per cent over the past year.
CoreLogic’s research director Tim Lawless said it appeared the property market would continue to struggle while the Reserve Bank tightened monetary policy.
“It’s hard to see housing prices stabilising until interest rates find a ceiling and consumer sentiment starts to improve,” he said.
“From current levels, interest rates are likely to increase by at least another 75 basis points and there is a good chance advertised stock levels will accumulate through the spring selling season, providing more choice for buyers and adding further downwards pressure on housing values.”
Despite the recent falls in values, they have only knocked off a small proportion of the COVID period surge. Sydney dwelling values lifted by 27.7 per cent through the pandemic and have fallen by 7.4 per cent since that peak, while in Melbourne they increased by 17.3 per cent and given back 4.6 per cent.
The RBA lifted interest rates for the first time in 12 years in May. Since then, it has increased the official cash rate by 1.75 percentage points and markets are expecting another half percentage point when the RBA board meets next week.
The bank’s corporate plan for the 2022-23 financial year, released on Wednesday, signalled the RBA remains focused on bringing inflation – expected to nudge 8 per cent by year’s end – to heel.
In a substantial departure from previous RBA corporate plans, the bank made explicit reference to its commitment to reaching its inflation target.
“A major priority for the Reserve Bank is to return inflation to the 2 to 3 per cent range over time while keeping the economy on an even keel. It is possible to do this but the path ahead is a narrow one and clouded in uncertainty,” it said.
“Inflation is expected to increase further over the course of 2022 and be back around the top of the 2 to 3 per cent target range by the end of 2024. Higher interest rates will assist with the return of inflation to target over time.”
While some economists have expressed concern about the impact of the RBA’s aggressive lift in interest rates, data collated by the Australian Prudential Regulation Authority suggests households are continuing to save money.
Bank deposits by households grew by 1.5 per cent or $19.5 billion in July to reach a record $1.3 trillion. It is 12 per cent up on a year ago and $305.5 billion up on their February 2020 level.
HSBC Australia chief economist Paul Bloxham is one who expects another half percentage point increase in the interest rate next week. From there, he is tipping quarter percentage point increments, taking the cash rate to 3.1 per cent by year’s end.
Bloxham said recent data, such as retail sales figures, showed there was still strong momentum in the economy while unemployment remained at a 48-year low of 3.4 per cent.
“The RBA has a tricky balancing act on its hands, as it seeks to tighten monetary policy sufficiently to get inflation back to target, without delivering an economic recession. As the central bank has described, this is a ‘narrow pathway’,” he said.
“However, with inflation well above target, still strong local growth momentum, a tight labour market and the Federal Reserve still highly focused on inflation, rather than growth, we now think the RBA will choose to deliver another 50 basis point hike.
Please see below the latest Proptrack price change index as at the end of August 2022
