The graph that puts falling home prices in perspective
POSTED BY John Ireland ON 17 Dec 2020
In one of his last public appearances before he retired from a decade-long stint as governor of the Reserve Bank in September 2016 – what we now know to be approaching the peak of Australia’s property price boom – Glenn Stevens gave a prescient warning.
“Prices can fall; they have fallen,” he warned. “I think, since I’ve been in this job, we’ve seen them fall two or three times.”
That such a statement of the bleeding obvious made big headlines at the time was a symptom of the frenzied state of Australia’s property market. We can now pinpoint the peak in the Sydney property market to July 2017; and Melbourne to November 2017, according to CoreLogic data.
Since then, prices have fallen 9.5 per cent in Sydney – within a whisker of the falls seen during the 1990s recession, when double-digit mortgage rates tipped borrowers over the edge. Melbourne is also off 5.8 per cent from its highs. And there’s more property pain to come, with economists tipping total falls of between 15 to 20 per cent all up.
The big picture on Aussie home prices
Sydney and Melbourne median dwelling sales prices, on a three month rolling average basis, since 1980.
But it’s important to keep things in perspective.
CoreLogic data showing the median dwelling sales price going back to 1980 confirms home prices have undergone several periods of adjustment during that time.
After the halving in real interest rates that followed the 1990s recession, Sydney home values more than doubled from less than $200,000 to more than $400,000 – where they stayed for almost a decade.
The global financial crisis in 2008 initially ate a chunk out of home valuations, before the Reserve Bank stepped in to drop interest rates to record lows, sparking the biggest property boom in Australia’s history.