Australian house prices fall for third straight month

author-avatar By on August 03, 2020
Australian house prices fall for third straight month

Photo by Syed Hadi Naqvi on Unsplash

Australian median housing values fell by 0.6% nationally in July, according to the latest CoreLogic home value index.

It's the third consecutive month of declines but is a marginal improvement on the 0.7% decline seen in June. 

Of the eight capital cities, only Canberra and Adelaide saw a rise in values, up 0.6% and 0.1% respectively, while Melbourne and Sydney led the decline, down 1.2% and 0.9% each. 

Regional markets have shown to be more resilient to falling values compared to their capital city counterparts, with housing values across combined regional areas unchanged, compared with a 0.8% fall across the combined capital cities. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner-occupiers.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

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Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
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Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

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  • No Nano fees, Free 100% offset sub account. Mobile app. Visa debit card & instant payments.
VariableMore details
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Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
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  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

Rates correct as of September 26, 2021. View disclaimer.

CoreLogic head of research Tim Lawless said housing markets across the country have remained relatively resilient to the impact of COVID-19. 

“The impact from COVID-19 on housing values has been orderly to-date, with CoreLogic’s national index falling only 1.6% since the recent high in April and housing turnover has recovered quickly after it’s sharp fall in late March and April," Mr Lawless said. 

“Record low interest rates, government support and loan repayment holidays for distressed borrowers have helped to insulate the housing market from a more significant downturn.

"Advertised supply levels have remained tight, with the total number of properties for sale falling a further 4.3% in the 4 weeks to July 27th, sitting 15.2% below where they were this time last year.

"Additionally, increased demand driven by housing specific incentives from both federal and state governments, especially for first home buyers, have become more substantial.”

Change in dwelling values as at July 31, 2020

 

Month

Quarter

Annual

Total return

Median value

Sydney

-0.9%

-2.1%

12.1%

15.3%

$866,110

Melbourne

-1.2%

-3.2%

8.7%

12.3%

$678,334

Brisbane

-0.4%

-0.9%

3.8%

7.7%

$502,167

Adelaide

0.1%

0.3%

2.4%

6.8%

$441,826

Perth

-0.6%

-2.2%

-2.5%

1.6%

$439,092

Hobart

-0.2%

0.9%

5.9%

11.5%

$486,771

Darwin

-0.3%

-1.6%

-2.2%

4.5%

$384,533

Canberra

0.6%

1.3%

7.2%

12.2%

$641,360

Combined capitals

-0.8%

-2.0%

7.9%

11.5%

$637,270

Combined regional

0.0%

-0.1%

3.9%

8.7%

$395,129

National

-0.6%

-1.6%

7.1%

10.9%

$552,912

Source: CoreLogic

But Mr Lawless said with the staggered end to JobKeeper and JobSeeker beginning in October, and home loan repayment holidays ending in March, the outlook for the market was skewed to the downside. 

“Urgent sales are likely to become more common as we approach these milestones, which will test the market’s resilience," he said.

"Similarly, the recent concerns of a second wave of the virus and the potential for renewed border closures and stricter social distancing policies are likely to further push consumer sentiment down.

"This is likely to weigh on both home buying and selling activity more broadly.”

High-end Sydney and Melbourne housing leads the downturn 

In Sydney, upper-quartile values were down 2.5% over the past four months, while lower quartile values were virtually flat at 0.1%.

Similarly, over the same period in Melbourne, upper-quartile values were down 5.2% while lower quartile values have declined a more modest 1.2%.

This quartile of housing led the charge of skyrocketing housing in the latter of half of 2019 and early 2020. 

Mr Lawless said more expensive housing markets were often the most susceptible to price swings. 

“Higher value markets tend to be more reactive to changes in the economic environment, having led both the upswing and the downturn over previous cycles," he said.

"The COVID related downturn has seen this trend playing out again, with upper quartile values down 2.9% across the combined capital city index since the end of March, while lower quartile values have fallen by only 0.5%."

Rental rates continue to slump 

Rental rates continued to trend lower in July, with the weakest conditions found in Hobart, Sydney and Melbourne.

The unit sector drove the biggest falls. 

Since March, capital city house rents have fallen by 0.3% while over the same period, unit rents have dropped 2.6%. 

Hobart has seen the biggest falls in rent since March, with house rents down 2.0% and unit rents down 4.4%. 

Mr Lawless said weaker rental conditions were most evident in markets affected by border closures and supply additions. 

“Some inner-city areas of Melbourne and Sydney have seen rental listings more than double since March due to the combined effect of temporary migrants departing, and overseas arrivals, including foreign students, stalling," Mr Lawless said.

"Compounding this weak demand position is the surge in construction activity and investment over previous years, which has added to inner-city rental supply."

Mr Lawless added Airbnbs being added to the rental market, and workers worst affected by restrictions were contributors to poor rental conditions. 

“Anecdotally, the transition of short-term accommodation, namely Airbnb, to permanent rentals is temporarily adding to supply," he said. 

"Additionally, the significant employment decline across food and accommodation services, arts and recreation services is compounding the weak rental demand as these sectors workers are more likely to rent.

"To date these sectors have seen the largest number of job losses and impact to wages." 


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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