Dwelling values down, largest falls in decades

CoreLogic research analyst Cameron Kusher said there is a significant difference in the figures throughout both the capital cities and the rest of the state regions.

“In fact, the national figures are at historic highs for a greater share of time than any of the individual regions have been.

“As at May 2019, dwelling values across the combined capital cities have fallen by 10.1 per cent from their September 2017 peak. The fall is the deepest correction throughout any period since May 1989.”

Mr Kusher said the combined regional market index has seen a more moderate decline, with values currently 3.0 per cent lower than their peak.

He said that in the same period, Sydney dwelling values have sat at historic highs for 44.9 per cent of the time.

“The current downturn in Sydney is the deepest of any over that period, with values currently 14.9 per cent lower than their peak.

“The current downturn is plotting unchartered territory, with prior downturns generally shorter and not particularly deep.”

Distance

Mr Kusher said regional NSW dwelling values were 4.9 per cent lower than their peak.

“The last time they were further away from their peak was January 2013,” he said.

“Over the 30 years from May 1989, regional NSW dwelling values have been recorded at historic highs for only 38.2 per cent of the time.”

He said Melbourne dwelling values are currently 11.1 per cent lower than their previous peak, which is their deepest correction at any time since 1980.

“While the city has seen a number of corrections since May 1989, they have generally been shallow with a quick recovery; the exception was the 1989 downturn where dwelling values didn’t recover until 1997. Over the past 30 years, values have been at an historic high for 44.9 per cent of the time.”

Mr Kusher said that in regional Victoria, dwelling values have been at historic highs 47.4 per cent of the time.

“Dwelling values are currently 1.1 per cent lower than their previous peak with the falls occurring over recent months. Interestingly, values have been at historic highs over the past 30 years more regularly than those in Melbourne.”

Mr Kusher said Brisbane values are 2.4 per cent lower than their April 2019 peak.

“The correction to date is fairly moderate compared to the other downturns experienced over the past 30 years. Over the 30-year period, dwelling values have been recorded at their peak for 49.3 per cent of months.

“Dwelling values in regional Queensland have spent only 40.4 per cent of their time at historic highs over the past 30 years. Although values have been at their peak fairly rarely, it is largely due to two corrections between 1994 and 1999 and the current correction which has been ongoing since 2008.

“Although values recorded a peak to trough fall of 12.6 per cent by October 2012, values are yet to return to their 2008 peak and remain 5.3 per cent lower as at May 2019.”

Slightly

In Adelaide, dwelling values have begun falling over recent months, Mr Kusher said, and as at May 2019, they were “slightly” below their previous peak, down only 0.5 of a percentage point.

“Over the past 25 years, dwelling values in Adelaide have been at historic highs for 53.8 per cent of the time. Adelaide has seen some downturns over the past 25 years; however, they have typically been fairly shallow and not taken particularly long to recover.

“In regional SA, dwelling value have been below their previous peak since April 2015 and are currently 3.0 per cent lower. The regional SA market has seen lots of short periods of value falls over the past 25 years, resulting in values being at historic highs for just 32.2 per cent of the time.

“Over the past 30 years, dwelling values have been at their peak for 38.5 per cent of the time. The current decline is the deepest of any over the past 30 years, 19.2 per cent lower. There have been a number of corrections over this time frame; however, they have mostly been quite small. The current downturn is showing no signs of ending as yet and has been ongoing since the middle of 2014.”

Mr Kusher said the current housing downturn in regional WA has seen values fall by 32.5 per cent from their peak in January 2008.

“There is no evidence as yet that the declines are ending,” he added.

“As a result of the ongoing declining values, regional WA values have only been at historic highs for 32.1 per cent of the time over the past three decades.”

Following strong growth in values over recent years, Mr Kusher said Hobart dwelling values have fallen by a cumulative 1.3 per cent over the past two months.

He added that throughout the past 30 years, Hobart dwelling values have been at a historic high for just 37.7 per cent of the time.

“There have been many small downturns over the period and two quite large ones which ran for a number of years despite peak to trough falls during these downturns being less than 10 per cent.

“Regional Tasmania is the only major region of the country in which values are currently at their historic high. Until the past few years, there had been an ongoing deep correction in values occurring. Over the past three decades, values have been at historic highs 35.7 per cent of the time.”

Lower

Mr Kusher said Darwin dwelling values last peaked in 2014 and they are currently 29.5 per cent lower than this peak.

“This is the largest and deepest correction seen in Darwin, although there isn’t a particularly long data history. Over the past 18 years, values have been at record highs for just 25.3 per cent of the time.

“Values in regional NT are volatile due to few properties; as a result, values have been at a peak just 28.6 per cent of the time over the past 18 years. Regional NT values last peaked in 2010 and they are currently 8.1 per cent lower.”

Dwelling values in Canberra are currently slightly lower than their peak after a decline of 0.2 of a percentage point in May 2019, Mr Kusher said.

“Over the past 25 years, dwelling values in Canberra have been at historic highs 38.2 per cent of the time.

“Over the period, there have been four major downturns, with the 1994 downturn running until 1999 and the 2010 downturn running until 2015. The other two downturns were reasonably short and sharp.”

Mr Kusher said that, collectively, these results may well be viewed as being “somewhat surprising”.

“In that, there is a sense that property values seem to be rising more often than not, yet across the individual regions, the majority have seen values below their previous peak more often than not.

“When downturns have occurred they are often small and values return to previous peaks fairly quickly. The current downturn for a number of regions is unprecedented in terms of the magnitude and length of declines. Given this, it could be a number of years after values begin to recover until they return to their previous highs.”