By Dinah Lewis Boucher

Posted on 02/08/2022Houses in Brisbane street
Property prices in five of Australia’s eight capital cities recorded falls in July.(ABC News: Liz Pickering)

Australia’s median property value has dropped by 2 per cent since the beginning of May, to $747,800— a figure that includes houses and apartments, the latest housing data shows.

CoreLogic research director Tim Lawless says Australia’s housing market conditions were likely to worsen as interest rates ticked higher through the remainder of the year.

Here’s a state-by-state breakdown of Australia’s latest housing figures.

Sydney: home prices down

Average change: 2.2 per cent decrease in July

Sydney median house value: $1,346,193

Median unit value: $806,310

Five of the eight capital cities recorded a month-on-month decline in July, led by Sydney dwelling values recording a drop of 2.2 per cent.

“Although the housing market is only three months into a decline, the national Home Value Index shows that the rate of decline is comparable with the onset of the global financial crisis (GFC) in 2008, and the sharp downswing of the early 1980s,” Mr Lawless said.

“In Sydney, where the downturn has been particularly accelerated, we are seeing the sharpest value falls in almost 40 years.”

The harbour city still has a median house price of $1.35 million and median unit price of $806,300

Adelaide: home prices up

Change: 0.4 per cent increase in July

Adelaide median house value:  $705,634

Median unit value: $431,409

Corelogic data  shows Adelaide dwellings have recorded a 24.1 per cent annual increase

Brisbane: home prices down

Change: 0.8 per cent drop in July

Brisbane median house value:  $884,336

Median unit value: $504,520

Brisbane edged into negative territory for the first time since August 2020. 

Mr Lawless says the trend in rising rents is seen in each capital city, led by Brisbane with a 4.2 per cent rental rise over the three months to July.

“Rental markets are extremely tight, with vacancy rates around 1 per cent or lower across many parts of Australia,” he said.

Canberra: home prices down

Change: 1.1per cent drop in July

Canberra median house value:  $1,047,912

Median unit value: $626,128

Canberra’s median house value sits at $1.05 million.

Mr Lawless said that unit values across the combined capital cities are generally recording smaller falls compared with house values.

“This trend is most apparent across the three largest capitals as well as Canberra, where housing affordability challenges may be deflecting more demand towards the medium to high-density sector,” Mr Lawless said.

“Such widespread and rapid rental growth is likely to remain one of the key domestic factors pushing up inflation, along with construction, food, transport and energy costs. 

“While some of these can be attributed to global supply chain issues, the rental situation is a domestic one caused by a combination of tight supply and amplified demand,” Mr Lawless said.

Darwin: home prices went up

Average change: 0.5 per cent increase

Darwin median house value: $589,748

Median unit value: $374,340

Grey roofs in a Tasmanian suburb
The RBA decided to hike interest rates for a fourth straight month, taking the cash rate to 1.85 per cent.(ABC News)

Hobart: home prices down

Change: 1.5 per cent decrease

Hobart median house value: $782,748

Median unit value: $577,307

Corelogic data shows Hobart’s dwelling values recorded a 10.1 per cent increase over the year to July.

Melbourne: home prices down

Change: 1.5 per cent decrease

Melbourne median house value: $964,950

Median unit value: $614,351

Melbourne dwelling prices are now down for five months in a row with prices recording a 1.5 per cent decline in July. 

The data shows that major regional centres Geelong, Ballarat also recorded a decline in home values over the three months to July.

Perth: home prices slightly up

Change: 0.2 per cent increase

Perth median house value: $587,024

Median unit value: $411,460

Looking at annual figures, Perth dwellings have recorded a 5.5 per cent increase.

Mr Lawless says that Perth, Adelaide, and Darwin property markets had recorded a sharp slowdown in the pace of capital gains since the first interest rate hike in May.

A table showing that Australia's median property price dropped 1.3 per cent in July 2022 to $747,812.
Property prices in Sydney, Melbourne and Hobart fell sharply in July.(CoreLogic)

How will rate rises change things? 

The RBA has lifted the cash rate by 1.75 percentage points since its first rate rise in May to 1.85 per cent.

Just as the cut in interest rates to record lows was the key driver of the price boom coming out of the pandemic lockdowns, AMP Capital chief economist Shane Oliver says the surge in interest rates now underway will be the key driver of the property market ahead.

“Being able to borrow at a fixed rate of 2 per cent or less was a key driver of the boom in prices with fixed rate lending accounting for 40-50 per cent of new lending about a year ago,” he said.

“But with fixed mortgage rates now up nearly three-fold from their lows and variable rates rising rapidly this has substantially reduced the amount new home buyers can borrow and hence their capacity to pay.

“As a result, the rug has effectively been pulled out from under the property market.”

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