Housing values decline for the fourth straight month

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on September 01, 2020
Housing values decline for the fourth straight month

Photo by Kon Karampelas on Unsplash

House prices in Australia declined 0.4% in August - the fourth straight month of falls - with Melbourne the 'main drag'.

While CoreLogic's home value index fell for the fourth straight month, the rate of decline slowed, and five of the eight capital cities recorded steady or rising values through August.

Over the month, values were down 0.5% in Sydney, down 0.1% in Brisbane, and down 1.2% in Melbourne.

Adelaide and Perth were flat, while values increased in Hobart (+0.1%), Darwin (+1.0%), and Canberra (+0.5%).

Over the past 12 months, however, prices are still up in all capital cities, except Perth where values have declined 2.0%, while Darwin was flat.

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%)

  • 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%
LIMITED TIME OFFER

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
ZERO APPLICATION FEESFEE FREE OFFSET

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
ZERO APPLICATION FEESFEE FREE OFFSET

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
FixedMore details
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
REFINANCE IN MINUTES, NOT WEEKS

Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.

Rates correct as of January 26, 2022. View disclaimer.

CoreLogic's head of research Tim Lawless said Melbourne was the "main drag" on the headline results.

"Through the COVID period to date, Melbourne home values have fallen by 4.6%," he said.

“The performance of housing markets are intrinsically linked with the extent of social distancing policies and border closures which also have a direct effect on labour market conditions and sentiment.

"It’s not surprising to see Melbourne as the weakest housing market considering the extent of the virus outbreak, and subsequent restrictions, which have weakened the economic performance of Victoria."

homevals

Source: CoreLogic

Changing to 'scrambled' cityscapes, regions boom

While home values in the capital cities during the COVID-19 period have been mixed, property analyst group Propertyology said the pandemic will change the way we think about how we live.

Propertyology head of research Simon Pressley said Australian capital cities will move from a "fried egg" model, with a dense downtown core and sprawling suburbia, to a more evenly-balanced "scrambled egg" model.

“People will disburse in a different pattern. A germ does not diminish Australia’s total demand for shelter, but it will significantly influence where people choose to take shelter,” he said.

“More manageable mortgages, low density locations that are less susceptible to future lockdowns, a regional relocation, and working from home will be driving forces.”

Mr Pressley also said the pandemic is the final 'nail in the coffin' for inner-city apartments.

“This asset class was increasingly problematic pre-Covid. And now the future is uncertain for workers in hotels, restaurants and hospitality that normally service international visitors," he said.

"Ditto, the airline industry and international students. Many of this demographic are part of the yolk of the egg, renting an inner-city apartment.”

Mr Pressley also said there could be a "capital city exodus" of more than 100,000 people in the next three years.

"In locations all over Australia, our buyer’s agents have already observed first-hand proof of the regional shift," he said.

CoreLogic's home value index noted performance was mixed in the regions.

Regional NSW was up 0.4% on the month, however other areas were down, such as regional NT (-2.3%), and regional WA (-1.4%). 

Notably, in the past 12 months, regional Tasmania's values are up 9.8%, level with Sydney's performance, with most other regions also up on the year.

Mr Lawless said regional areas are more immune to home value triggers such as migration.

"Unlike their capital city counterparts, which usually receive 85% of net overseas migration, most regional markets have avoided the drop in demand caused by the pause in migration," he said.

"Regional markets may also be appealing for their relatively low density and lower price points. The normalisation of remote work through the pandemic could make proximity to major cities less of a factor in home purchasing decisions.”

Mr Pressley also said the pandemic provided a taste of working from home and a short commute, with 5% of the workforce working from home 'the new normal'.

“After settling into a new groove, we [Propertyology] then realised each of us had ‘manufactured’ an extra 12-hours in our week through not having to commute to and from the office each day," he said.

"That does wonders for productivity and work-life-balance. Consequently, we have made this a permanent thing.”


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison is passionate about breaking down complex financial topics for the everyday consumer.

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