Australian home prices have had their most drastic drop ever, with values across the nation dropping by nearly 10% in a few months. Here on the Sunshine Coast, some have been even higher. For example, Caloundra has had a 15% drop, based on the latest Core Logic data. While most suburbs on the Sunshine Coast have seen a 10% drop some have only seen a 3% adjustment
The CoreLogic Daily Home Value Index recently revealed that property prices experienced a record-breaking drop, with a 8.4 per cent decrease in the opening week of the new year, compared to the peak in May of 2020.
The outcome was astonishing and surpassed the earlier record of highest to lowest declines, when the value of homes dropped 8.38 per cent between October 2017 and June 2019.
Eliza Owens, the head of research for CoreLogic, observed that the current record-breaking slump in prices has occurred over a much shorter nine-month span compared to the previous record, which lasted for twenty months. Additionally, further decreases are anticipated throughout 2023.
Recently, many economic experts cautioned Australians about a potential disaster in the real estate market later in 2023, probably around September, which is something I agree with. If you read one of my older articles I was close to predicting the turn of the market in 2022.
Shane Oliver, the chief economist at AMP, has forecasted that real estate values will hit their lowest point in September 2023, dropping 20% from the height they had reached in May 2022. I personally feel the Sunshine Coast property market will continue to decline throughout all of 2023.
WHAT CITIES ARE BECOMING MORE AFFORDABLE?
Australia’s most expensive homes were located in the three biggest cities, which were the main source of the economic decline.
In Sydney, home values experienced a remarkable 13 per cent decrease from their peak to their lowest point. Brisbane experienced a 10 per cent decrease, while Melbourne saw a more modest 8.6 per cent decrease.
House values in some inner city Sydney locations have reverted to their levels prior to the outbreak of the pandemic.
The capital city of Perth has shown the most resilience, with its home values declining by less than 1 percent since the maximum in August of the preceding year.
Compared to major cities the Sunshine Coast continues to be more affordable. What it’s lacking though is employment with strong wage levels. I assume that as the Maroochydore CBD continues to be developed with its high-speed internet to Asia this will bring in larger corporate companies along with better salaries too.
WHAT COULD BE THE REASON FOR THE DECLINE?
The remarkable spike in interest rates is the primary factor in the sharp decline of values. This set of rate hikes was the most rapid ever recorded.
In the last eight months, the underlying cash rate has gone up by three-hundred basis points, significantly reducing the buying power of prospective homeowners. This limitation has subsequently put a ceiling on the amount they can put forward when buying a property.
The Reserve Bank of Australia (RBA) has reported that Australians are carrying significantly more debt than in past periods of rate hikes, with the housing debt-to-income ratio rising to 188.5 per cent. This is markedly higher than the 162 per cent recorded a decade ago and the 130.2 per cent seen in 2002.
Some of the declines could be attributed to the abundance of spending that followed the end of the lockdown. In addition to increasingly high costs of living, households had less to put towards a deposit.
In addition, the utilization of technology has drastically changed the way in which people communicate and do business. Nowadays, people are more likely to communicate through digital platforms rather than face-to-face. This has caused a substantial shift in the manner in which people communicate, with technology playing a major role in the process. People can do business without the need to be out as often. Spending less on everything like food out, coffee, fuel and even clothes.
HOW CAN ASSET AGENTS HELP YOU?
Own a property on the Sunshine Coast and need advice on what to do? reach out. Happy to help.