By Nicola McDougall, Editor, The Female Investor
Top end and inner-city suburbs of Melbourne and Sydney are seeing a slip in values as higher fixed mortgage rates, affordability, and increased buyer choice impacts values at a granular level.
CoreLogic’s interactive Mapping the Market tool provides an analysis of 3,111 capital city house and unit markets and shows a quarterly decline in values across 23.6 per cent of suburbs, the majority of them in Sydney and Melbourne.
Using the CoreLogic Home Value Index, a methodology used widely by top economists and institutions, the tool provides a national overview of each suburb’s current median value and quarterly and annual change in values.
CoreLogic Head of Research, Eliza Owen, said the quarterly figures confirmed there was a gradual shift from a prolonged period of broad growth to a multi-speed market that differed between capital cities, regions and property types.
The CoreLogic Home Value Index, shows national dwelling values rose 2.4 per cent in the first quarter of 2022, which is lower compared to the same period in 2021, when values increased 5.8 per cent.
“High-end and inner-city areas are emerging as the first suburbs to experience this shift in market conditions,” Ms Owen said.
“It is likely that slightly tighter lending conditions and higher average fixed rates are hitting the very top of housing markets first.
These same areas are seeing some of the bigger jumps in advertised stock levels too so as we see new demand for housing in these areas decline buyers have more choice, more time for decision-making, and more power at the negotiating table.”
Of the 917 house and unit markets analysed across Sydney through the March 2022 quarter, 354 (or 38.6 per cent) recorded a decline in value. More than half the declines occurred in house markets.
Quarterly value declines ranged from -7.2 per cent for houses in Beaconsfield, five kilometres south of Sydney’s CBD, to -0.01 per cent for houses in Gladesville on the city’s lower north shore.
Almost half of the 648 house and unit Melbourne markets analysed recorded a slip in values in the three months to March (46.8 per cent). Declines ranged from -6.4 per cent across houses in the inner-city suburb of Cremorne, to a -0.01 per cent fall across houses in Boronia.
At a broader market level, Ms Owen said Melbourne had recorded two monthly market declines in four months and suburb movements confirmed the city was shifting into the downswing phase in its cycle.
“Quarterly declines have been more skewed towards the inner and inner-east of Melbourne, as higher fixed mortgage rates and affordability constraints may be seeing demand slip from the very top end of the market,” she said.
“This pattern is mirrored across Sydney, and it’s a pattern that has been observed through previous cycles.”
As the housing market cools across Melbourne’s inner city and east, the periphery of the metropolitan is experiencing thriving market conditions. Units across the suburb of Wyndham Vale saw the strongest quarterly increase of Melbourne house and unit markets, at 6.7 per cent.
Ms Owen said the surge in more affordable parts of the city could be a result of homebuyers looking for alternative options after being priced out of more central locations.
Unlike Sydney and Melbourne’s softer conditions, Brisbane and Adelaide continue to shine as Australia’s best performers. Of the 651 house markets analysed across Brisbane and Adelaide, not a single one saw a quarterly or annual decline in values. Minor falls in unit markets meant that less than one per cent of markets analysed in these cities saw a quarterly decline.
Ms Owen said some of the strongest value gains across the Brisbane house markets were south of Brisbane River where quarterly value increases of around 10 per cent were recorded for Acacia Ridge, Capalaba, and Yeronga. Topping the list for Greater Brisbane was Logan Central, where values increased 13.5 per cent in the March quarter.
“Conditions across south east Queensland continue to be supported by strong interstate migration from those relocating from NSW and Victoria and the relatively affordable housing stock,” Ms Owen said.
“For those migrating from the southern states, a typical house in Brisbane was $857,000 in March, significantly less than Sydney’s median of $1.4 million.”
In Adelaide, the strongest quarterly value gains were in Largs North, Ottoway, and North Haven, close to trendy breweries and beaches.
The stellar performance across Adelaide reflects the high, ongoing demand across the state, positive trends in interstate migration, relatively affordable dwelling values, and low levels of advertised stock.
CoreLogic’s median dwelling value for Adelaide was $602,000 at the end of March, making it the country’s third most affordable capital city behind Perth and Darwin.
Canberra saw 5.2 per cent of markets analysed see a quarterly decline in values. Unlike other capital cities, the strength of the Canberra market was most evident in the unit segment, where not a single suburb saw a fall in unit declines over the quarter or year.
Ms Owen puts the strength of Canberra’s unit market to “relative affordability compared to the house segment, as well as increased investor participation in housing markets, as rents rise, and units generally offer better gross rent yields.”
CoreLogic analysed 55 house and unit markets across Hobart for the March quarter, with 10.9 per cent of suburbs recording a decline in values.
Ms Owen said Tasmania’s many tailwinds supported the market for long-term capital growth.
“While migration trends to the state have not been as favourable since the onset of COVID-19, eased travel restrictions may see a more robust return in domestic and international tourism, which would support economic conditions, and likely further tighten the rental market,” she said.
“This beautiful state still poses inviting opportunities for retirees and tree-changers, with dwelling values sitting relatively low compared with nearby southern states.”
Across Perth and Darwin, the portion of markets seeing a quarterly decline was 13.4 per cent and 18 per cent respectively. Despite seemingly high instances of quarterly value falls, these markets overall have enjoyed decent value gains in the March quarter.
Across Perth, value gains were strongest in Wannanup units, up 9.3 per cent in the quarter, while the top house market was Forrestdale, with gains of 5.3 per cent.
Access CoreLogic’s Mapping the Market tool here.