February 8, 2023

Australian housing market update: February 2023

The housing market started the year where it left off in 2022, chalking up the ninth consecutive monthly drop in Australian home values. The national Home Value Index was down -1% over the first month of the year following a larger -1.1% fall in December.

It looks like we may have moved through the eye of the storm in August last year, when our national index dropped -1.6% in a month.  Since then the national monthly rate of decline has generally eased, however at -1.0% over the month and -3.2% over the rolling quarter, housing values are still falling quite rapidly compared to previous downturns.

The downturn remains geographically broad-based, with every capital city posting a decline in dwelling values through the month, led by Hobart and Brisbane, down -1.7% and -1.4% respectively, while the smallest drops were recorded in Perth and Darwin at -0.3% and -0.1%.

The most noticeable easing in value falls can be seen across the premium end of the housing market, where the country’s most expensive properties have led both the recent upswing as well as the current downturn.  Across the combined capitals, the rolling quarterly rate of decline in the upper quartile values has improved from a recent low of -6.1% over the September 2022 quarter to -4.0% over the three months to January.

This trend is most apparent in Sydney’s detached house market, where quarterly declines eased from -7.7% in the three months to August, to -3.9% in the three months to January. The improvement could be reflective of more buyers taking advantage of larger price drops across the premium sector, where house values are down -17.4% since peaking in January 2022.

Despite easing rates of internal migration and a partial erosion of the pre-pandemic affordability advantage, regional housing values are holding up better than capital city markets so farThe milder decline comes after a substantially stronger upswing. Across the combined regional areas of Australia, housing values surged 41.6% higher through the upswing compared with a 25.5% rise in values across the combined capital cities.  Since peaking in June, the combined regionals index is down -7.4%, while capital city values are now -9.6% below their April peak.

This will be an interesting trend to watch over the longer term, but at the moment it seems regional housing markets have seen a structural shift in the underlying demand profile.  With more Australians willing to base themselves outside of the capital cities and remote working remaining a viable option across some sectors of the labour force, it’s unlikely we’ll see a mass exodus from regional markets.

Read the full transcript here or watch the capital city video updates below for the latest news: