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Sydney property market takes big hit in August

CoreLogic monthly Home Value Index

A declining value trend is now evident is almost all capital cities, but some are falling faster than others.

Aussie house prices have posted their biggest monthly drop in almost 40 years, as homeowners and would-be buyers continue to feel the pinch of rising interest rates.

Values fell nationally by -1.6% over August, according to CoreLogic, the largest month-on-month decline since 1983. This was driven by a sharp drop of -2.3% in the country's biggest property market, Sydney.

Almost all other capital cities also posted monthly falls, ranging from -0.1% in Adelaide to -1.8% in Brisbane. Darwin was the only exception, recording an increase of 0.9% in August.   

Capital city Month Quarter Annual
Sydney -2.3% -5.9% -2.5%
Melbourne -1.2% -3.8% -2.1%
Brisbane -1.8% -2.5% 17.5%
Adelaide -0.1% 1.6% 21.8%
Perth -0.2% 0.4% 4.9%
Hobart -1.7% -3.3% 5.8%
Darwin 0.9% 2.3% 6.3%
Canberra -1.7% -2.6% 7.8%
Combined capitals -1.6% -3.8% 2.2%
Combined regional -1.5% -2.1% 13.4%
National -1.6% -3.4% 4.7%

Source: CoreLogic. 

Adelaide remains the best-performing capital city property market of 2022, with year-to-date value growth of 11.5%. Sydney by contrast has fallen by -6.8% over the year so far, with house prices there down -6.7% in just the past three months alone – something Gareth Aird, CommBank Head of Australian Economics, said "could only be described as a collapse in prices".   

CoreLogic Research Director, Tim Lawless, predicted the downtown would continue for the rest of the year, and likely into 2023.

"It’s hard to see housing prices stabilising until interest rates find a ceiling and consumer sentiment starts to improve," he said.

The Reserve Bank of Australia (RBA) has raised the official cash rate four times in as many successive months since May, and further increases are expected this year. Most major lenders have passed on this rise in full or partly, leading to increased interest payments for home owners with variable rate home loans. 

"From current levels, interest rates are likely to increase by at least another 75 basis points and there is a good chance advertised stock levels will accumulate through the spring selling season, providing more choice for buyers and adding further downwards pressure on housing values," Lawless said. 

Aird noted that "house prices have fallen by more than unit prices over the past three months, [which] is a reversal of the trend in 2021". While he reaffirmed CommBank's expectation that national dwelling prices will fall from peak to trough by around -15%, "we now see that trough reached sooner given prices are falling at a slightly quicker pace than we anticipated.

"Our narrative is quite simple on the housing front," Aird said. "RBA policy decisions from here will drive the demand for credit, which in turn will influence home price outcomes. The Australian housing market is in the RBA’s hands."

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This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Past performance is no guarantee of future performance. The commentary provided from external companies that are not a member of the Commonwealth Bank of Australia Group of Companies (the CBA Group) does not represent an endorsement, recommendation, guarantee or advice in regard to any matter. The CBA Group does not accept any liability for losses or damage arising from any reliance on external companies and their products, services and material.