Home prices strike first decline since the onset of the pandemic

Australia’s home prices marked their first drop since the start of the pandemic, with the price index showing a 0.11% decline in May.

PropTrack’s latest Home Price Index showed an overall slowing in monthly price growth across Australia, with four capital cities diving into the red.

Sydney and Melbourne remained the biggest losers, with declines of 0.29% and 0.27% over the month. Hobart also reported a decline, albeit only marginal at 0.05%.

Meanwhile, the Canberra recorded its first decline in over three years, ending May with a 0.12% fall in home prices.

On a yearly basis, only Brisbane and Adelaide maintained growth rates of above 20%, and therefore were the strongest capital cities in terms or price appreciation in May.

Overall, capital cities posted a 0.15% decline in May.

On the other hand, home prices across regional areas managed to stay afloat over the month with a 0.01% growth.

PropTrack economist Paul Ryan said the two-speed housing market trend has already clearly emerged.

“Affordable, lifestyle regions of Brisbane, Adelaide, regional NSW and Tasmania continue to see solid growth, with flat or falling prices elsewhere,” he said.

Mr Ryan said the speed of official interest rate hikes and wages growth remain the key “unknowns” that would impact price movements over the rest of the year.

“Conditions have now shifted rapidly from 2021. This follows expectations of sharply higher interest rates in 2022, which will erode the affordability of existing prices.”

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