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After another month of reversing price growth fuelled by rising interest rates, it's becoming clearer that the Australian property market has well and truly shifted into a new part of the cycle.
CoreLogic's June 2022 report indicates that every market around the country has passed its peak, and there's more downward pressure on prices to come thanks to growing inflation.
How should buyers and sellers proceed in this new housing environment? Let's find out.
The median Australian property price dropped by -0.6 per cent throughout June according to CoreLogic's latest figures.
Taking a closer look across the states reveals quite a large spread in performance, though.
Sydney took the biggest hit for the month with prices dropping by -1.6 per cent. Melbourne also posted a significant drop of -1.1 per cent.
After months of surging growth, the Brisbane market seems to have finally tempered, gaining just +0.1 per cent in June. Adelaide, meanwhile, continued its blazing run with another +1.3 per cent boost.
Perth's renewed push delivered a +0.4 per cent increase to prices, while Hobart remained relatively flat with a price change of -0.2 per cent.
Canberra also stagnated with +0.3 per cent, and Darwin pushed further ahead with +0.9 per cent.
The regional markets, which have seemingly remained resistant to downward price pressures, have finally eased off with combined growth of just +0.1 per cent in June.
Nationally, unit prices fell by just -0.4 per cent compared to -0.7 per cent for houses, indicating that the more affordable housing option may be offering more resilience to the market cooldown.
After taking an overall look at this recent property boom, CoreLogic has identified the moment that each capital city and region hit its cyclical peak, an the results may be surprising.
According to their findings, both Sydney and Melbourne — as well as their respective regional markets — hit peak growth more than a year ago and have been softening ever since.
Hobart and Perth also reached peak levels in the first half of last year, while Adelaide and Brisbane found the height of their growth around the 2021-22 new year period.
Having continued to surge throughout 2022, regional SA is the market that has peaked most recently, reaching a massive +7.4 per cent growth in the first quarter of the year.
Now that the broader property market has entered a period of downturn, it may be some time before another boom brings peak levels like this to Australia.
While new listings are trending upwards on the national level, it becomes a mixed bag when looking closer at different cities and regions.
In Sydney and Melbourne, supply has risen substantially. That's been a key factor in the strength of the slowdown we've seen in those two cities recently.
Listings are also trending higher in Hobart and Canberra, while Brisbane and Perth are still undersupplied. Adelaide, which is now clearly the country's strongest market, is showing a serious shortage of stock, with advertised listings close to -40 per cent lower than the five-year average.
Tim Lawless, CoreLogic's research director, explained that a drop in sales and the typical winter slowdown are contributing more to rising supply than any rush of new listings arriving on the market.
"We aren’t seeing any signs of panicked selling as housing conditions cool, in fact the trend is the opposite, with the flow of new listings to the market slowing," he said.
The RBA's third consecutive hike to the cash rate in early July has continued to negatively affect consumer sentiment which has slumped in recent months.
The result of that is a sizeable drop in buyer demand, illustrated by a -15.9 per cent reduction in home sales for the June quarter when compared to the same period in 2021.
Despite this, sales Australia-wide remain +13 per cent higher than the five-year average, so there's still plenty of action out there in the broader property market.
Several of our capital city markets have already seen growth slowing for over 12 months, but regional areas have retained much of the heat generated by the housing boom.
Finally, as CoreLogic's June results show, growth has eased right back in every regional market aside from SA.
The downward shift is now picking up the pace and regional markets are beginning to catch up to the downturn seen across the capitals.
Despite the loss of momentum, there may be more positive growth on the horizon for some of the country's more desirable regional destinations.
Hotspots like the Sunshine Coast, Gold Coast, Shepparton and Hunter Valley have all displayed signs that there's more growth to come, Ray White's chief economist Nerida Conisbee told the AFR.
"At the rate prices are rising in these areas, it’s quite possible for them to climb by around 20 per cent this year," she said.
"Many regions are still on track for a 10 per cent rise this year, so I think the housing boom is definitely not over for areas that are relatively close to capital cities."
The RBA's latest +0.5 per cent bump to the cash rate is another step toward the central bank fighting Australia's surging inflation, and it's having a significant impact.
As Mr Lawless pointed out, the performance of the Australian housing market will be partly dictated by just how high and how quickly the cash rate does rise. The further it goes, the less borrowing power people have, and that's sure to impact buyer demand.
It's still predicted by many economists like AMP Capital's Shane Oliver that the cash rate could peak at 2.5 per cent around the first half of 2023. That could push property prices down by 10 to 15 per cent.
If we were to hit that 15 per cent drop, that would pull property values back down to the level they were at in April 2021.
Pete Wargent of BuyersBuyers suggests that the downswing could be shorter than people expect, though, noting that there now seems to be an easing of inflationary pressures around the world.
"The good news for borrowers is that the peak of the inflation hysteria now appears to have passed," he said.
Even though Australia's inflation journey is a bit behind other countries, Mr Wargent still said that consumers should begin to feel more confident as it's predicted the RBA will begin cutting the cash rate again in 2023.
It should also be noted that, in a broader historical context, today's interest rates are still extremely low.
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Disclaimer: Property reports contain property estimate data and information provided by RP Data Pty Ltd trading as CoreLogic Asia Pacific ABN 57 087 759 171 (CoreLogic) and OpenAgent Pty Ltd, which is general in nature. It is not a professional property valuation or advice to be relied upon. The actual market value of the subject property may differ. We and CoreLogic do not warrant the accuracy, currency or completeness of the data and information to the full extent permitted by law, each excludes all loss or damage howsoever arising (including through negligence) in connection with the information. You rely on the property estimate at your own risk.
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