Australia’s housing prices slump as rental values skyrocket
Australian property values have seen their largest decline on record while rental values continue to climb amid low vacancies, according to new data.
CoreLogic has revealed home values dropped by 7.9 per cent in the past year and as interest rates continue to rise, the slump may not be over yet.
“The combined value of residential real estate in Australia rose to $9.3 trillion at the end of February, from $9.2 trillion in the previous month but well below the peak of $10 trillion in April 2022,” Corelogic’s head of research Eliza Owen said.
But even though property prices have plummeted in the past year, the rate of decline has slowed over the past month.
It’s not all bad news across Australia as regional South Australian properties trended upwards, by 13.2 per cent, in the past 12 months.
It was also welcome news for potential homebuyers in the often unreachable Sydney market, with home values decreasing by 13.4 per cent.
It comes as the Reserve Bank of Australia (RBA) hiked interest rates for the 10th consecutive time to 3.6 per cent as the central bank battles inflation.
Yesterday, RBA Governor Philip Lowe flagged there may be a pause in interest rate rises in the near future as inflation begins to respond to the monetary policy tightening.
But his message was echoed in the Corelogic data released today: the property market is slumping in response to fiscal tightening.
“Housing prices have also been declining, although it is difficult to determine the effect of this on spending as there had earlier been a large run-up in prices,” he said during the Australian Financial Review’s Business Summit.
It’s not just property values that have been impacted in the past 12 months, with rent values also skyrocketing.
“Annual growth in rent values held steady on the previous month in February, at 10.1 per cent,” Owen said.
“Annual growth in Australian rent values was 10.2 per cent in the 12 months to December, a record high.
“The most rapid annual rise is evident in unit rents across Sydney, Melbourne and Brisbane, where rents have increased around 14 to 17 per cent annually.”
It is indicative of the struggles Australians are facing with the rental market with low vacancies and high prices.
Lowe also emphasised the supply and demand dilemma for renters.
“Rents are also rising rapidly, with rental vacancy rates at very low levels in many parts of the country,” Lowe said.
