Sydney house prices have slumped 1.9 per cent in the past four weeks, the fastest rate of decline in more than 40 years, as rapidly rising interest rates take their toll on the market, data from CoreLogic shows.
Melbourne prices have also fallen sharply, down by 1.2 per cent, while Brisbane slipped by 0.6 per cent. Nationally, prices have dropped by 1.2 per cent during the same period.
“We haven’t seen Sydney prices fall this rapidly since the mid-80s, and at this rate, the 20 per cent peak to trough price drop forecast seems like an underestimate,” said Shane Oliver, AMP Capital chief economist.
“There’s also quite a sharp acceleration in the decline in Melbourne, and Brisbane is now in negative territory, while Adelaide and Perth are slowing down.
“This really reflects the sensitivity of the household sector and the housing market to higher interest rates.”
Both cities are now recording a faster rate of decline compared with the previous down phase that started in 2017, said Tim Lawless, CoreLogic’s research director.
During the 2017 to 2019 downturn, Sydney values were down by 2.6 per cent over the same number of days since peaking and Melbourne was lower by just 0.8 per cent from their peak.
“Six months ago I would have been surprised at the pace of decline that we are seeing now, but considering the worsening outlook for interest rates, plummeting consumer sentiment and the impact of such high inflation on household balance sheets, the more rapid than expected rate of decline isn’t all that surprising,” Mr Lawless said.
With some economists forecasting multiple 50-basis-point rate increases for the rest of the year, price falls are likely to accelerate across the board.
“The reality is housing price declines are gathering momentum, and it’s likely the decline phase will worsen before it gets better,” said Mr Lawless.
“As more cities and regions start to record falling housing values, this will feed into larger reductions in the national, combined capitals and combined regionals index.
“Based on the current trends, it’s likely that Adelaide will start to trend into negative growth territory over the coming months, and many of the major regional centres were already recording month-on-month declines at the end of June.”
If the RBA raises interest rates by another 0.5 percentage points for another two or three times, Sydney prices could fall by 3 per cent each month, Dr Oliver said.
“The risk is that monthly price declines will accelerate, particularly if the Reserve Bank continues at this pace,” he said.
“That could really speed up the rate of price falls, higher than what we’re seeing now.
“But the RBA don’t seem to be that concerned about the household sector falling house prices at this point. But I think the fall in house prices is sending a signal that the household sector is very vulnerable.”
So far, there has been no evidence of large-scale distressed listings, despite a small uptick in the numbers, said Louis Christopher, SQM Research managing director.
A total of 6234 properties are listed as distressed based on the keywords vendors use to describe the listings, according to SQM Research data. This was up by 220 properties since the beginning of July.
“The trend of distressed listings is up, but it’s coming from a very low base, so I don’t think we’re going to see mass foreclosures or a housing crash at this point,” Mr Christopher said.
“But I do see a situation towards the end of the year when there may be some great opportunities for buyers. There’ll be more distressed sales activity and I think there’ll be a great window for buyers come the December quarter.”
This article is from Australian Financial Review, please click the following link for the original article: https://www.afr.com/property/residential/sydney-house-prices-fall-1-9pc-in-just-four-weeks-20220725-p5b4aq