Australia’s three major cities on the east coast have all seen property prices drop in early July, but remain higher in percentage price based off year-on-year figures.
Propertyupdate.com.au’s Michael Yardney sites buyer and seller confidence as the reasoning behind the price drops in Sydney, Melbourne and Brisbane between late June and early July.
This has resulted in an overall Australian capital dwelling price decreased -1.0 per cent over the last 28 days and 8.2 per cent higher year on year.
Importantly, overall year-on-year price growth indicates Brisbane is experiencing the record levels of growth this year, as its fellow major cities had in the past two years. With property prices showing:
- Sydney property prices dropped -0.3 per cent from last week, dropped -1.6 per cent over the past 28 days, and up 5.5 per cent over the last 12 months.
- Melbourne property prices dropped -0.2 per cent from last week, dropped -1.2 per cent over the past 28 days and up 2.9 per cent over the last 12 months.
- Brisbane property prices remained flat from last week, dropping -0.1 per cent over the past 28 days and up 25.4 per cent over the last year.
What’s on the property market horizon for 2022?
While we’ve started seeing a slight dip in housing prices recently, according to leading economists, this could be the start of a trending dip in the market that could last the next 12 months.
AMP Capital chief economist, Shane Oliver, told the Australian Financial Review the CoreLogic home value index for June shows Sydney house prices have dropped by 1.6 per cent in June.
He explained the decrease was faster than monthly declines seen during the 1980s recession and close to the price falls recorded during the 2018 to 2019 downturn.
“By the way prices are going, I think Sydney, Melbourne, Canberra and nationally could fall by 15 per cent to 20 per cent, while Brisbane and Adelaide could drop by 15 per cent,” Dr Oliver said.
“At this rate, Sydney’s recent boom will be wiped out by around July or August – but that will mean a 21 per cent fall which is slightly more than the 20 per cent we are expecting.
“Melbourne’s recent boom is also likely to be wound back by around the same period with a top to bottom fall of at least 15 per cent.”
CoreLogic research director, Tim Lawless, added to the AFR report, the June downturn from Sydney and Melbourne is just the start to what Australia can expect to see for the remainder of 2022.
“It’s starting to become a sharper downturn, and we’re seeing more regions moving into negative territory,” Lawless said.
“Sydney and Melbourne are obviously still driving the sharpest falls but as we progress through the second half of the year, more and more of the capitals as well as the regional markets start to show these negative month-on-month and ultimately negative quarterly results.”
Looking ahead to 2023
There’s more difficult news for homeowners and first home buyers predicted for 2023 with planned interest rate rises until the end of 2022, and an expected plunge in housing values ahead.
According to major banks, house prices will fall by five per cent this year and a further 10 to 15 per cent through 2023.
According to major investment bank Jordan, Sydney and Melbourne will hit with a steeper fall than other Cities for property prices as homebuyers’ borrowing power drops due to super-sized rate hikes.
Jarden Chief economist, Carlos Cacho, said: “Falls in Sydney and Melbourne are likely to be larger and faster. This would be the largest house price correction since at least 1980.”
Australian economist at Commonwealth Bank, Gareth Aird, compounded Cacho’s comments, going as far to predict an 11 per cent fall in Sydney house prices followed by another seven per cent next year, with similar figures in Melbourne.
Major Cities effect on Conveyancers?
The June dip in the housing market major cities is set to continue through July and further in 2022. Ultimately, conveyancers should expect this to replicate in the amount of purchase matters, especially in the latter end of the year.
Conveyancers should still expect to see high volumes of sale matters in their workflow, with vendors wanting to take advantage of the high purchase prices before they reach the expect 15 to 20 per cent decrease my mid-next year.
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