June 2022
House Price Report

House prices fall for the first time in two years

• House prices declined 2.7% over the quarter to $1.55 million, although they remain 8.3% higher than a year ago. This is the first quarterly fall in two years and the steepest since early 2019.
• Unit prices declined 0.6% to $790,983. This is the second consecutive quarter unit prices have fallen, which has stalled the annual growth rate to 0.4%.
• House prices fell almost five times faster than unit prices over the June quarter.
• House price falls have spread geographically to North Sydney and Hornsby, Inner West, Northern Beaches, City and Inner South, Sutherland, Parramatta, Outer South West and Blacktown.
• Unit prices fell over the quarter across all areas of Sydney, apart from Blacktown, Inner West, Parramatta, Ryde and North Sydney and Hornsby.

Sydney’s housing market downturn gathered momentum and spread geographically over the second quarter of 2022. House prices declined for the first time in two years to provide the steepest quarterly drop since March 2019. They are now 2.7% below the March 2022 price peak, with the annual growth at the slowest rate since December 2020. In comparison, the pace of decline for unit prices has been relatively moderate despite falling for the second consecutive quarter. They are now 1.1% below the September 2021 price peak. The stronger performance of units follows a period of substantial outperformance of house prices, which rose 40% from trough to peak during the pandemic, while unit prices rose only 9%. This stark growth difference drove a record price gap but this is now narrowing as house prices fall more than twice as fast since their respective price peaks. Affordability constraints, reduced borrowing capacity and the perceived value units offer are all helping to steer buyer demand towards units. This became particularly evident over the June quarter, with a significant acceleration in house price falls which are now dropping almost five times faster than unit prices.

The slowdown in Sydney’s housing market was occurring before the recent interest rate hikes, as prices moved through the peak rate of quarterly growth in mid-2021 and annually by late 2021. Initially sparked by increasingly unaffordable housing and higher levels of supply providing more choice for buyers. Currently, the total advertised supply is sitting 13% higher than last year and 7% above the five-year June average – shifting the balance of power to buyers. At the same time, new listings started to track lower over the June quarter. This indicates home owners are not rushing to sell as housing conditions cool and home loan rates rise. It suggests that the build-up of supply is down to a pullback in the number of sale transactions. Selling conditions have become more challenging, clearance rates have weakened to a two-year low of 55% over the June quarter and overall properties are spending longer on the market. Potential buyers might be in the driving seat but they are also facing worsening mortgage affordability. Cash rate hikes have added around $726 a month to a $1 million home loan.² This has clearly weighed in on buyer sentiment adding to further price falls. The high purchasing price in Sydney puts households in a vulnerable position to higher interest rates due to the high debt level, ultimately eating into savings. The higher cost of debt and inflation is damaging borrowing capacity, placing a brake on housing demand and price.

² Domain Home Loans, based on Domain Home Loans Repayment Calculator. The approximate amount monthly home loan repayments have increased based on the cumulative interest rate rises of May, June and July. Based on a 30-year principal and interest loan with an initial 3.5% interest rate. Information is intended as a guide only. Fees and charges excluded.

Unit prices outperform house prices

• House prices slipped by 0.9% over the quarter to $1.07 million. This is the first back-to-back quarterly decline since the 2018-19 downturn. They remain 5.2% higher annually.
• Unit prices increased by 0.4% over the quarter to $579,532. They are 1.4% higher than the same time last year.
• It is the first time in two years that unit prices have outperformed house prices.
• House price falls were isolated to the premium areas of Melbourne, falling over the quarter in Melbourne’s Inner, Inner East, Inner South, Outer East and Mornington Peninsula.
• Unit prices rose over the quarter across all Melbourne regions, apart from the Inner and Mornington Peninsula.

Melbourne’s housing market slowdown didn’t gain any further negative momentum over the June quarter. The pace of house price decline was at the same rate recorded the previous quarter. Although it is the first time house prices have fallen for two consecutive quarters since the 2018-19 downturn. They are now 1.8% below the December 2021 price peak, with the annual growth at the slowest rate since the end of 2020. In comparison, unit prices have bucked this downward trend to nudge marginally higher over the quarter. However, they do remain 2.3% below the December 2021 price peak. While overall unit prices have dropped further from the respective price peak, recent trends could be telling of the future state of the downturn The stronger performance of units this quarter follows a period of substantial outperformance of house prices, which rose 24% from the trough to peak during the pandemic, while unit prices rose only 9%. This stark growth difference drove a record price gap but this is now narrowing as house prices fall and unit prices rise.³ Affordability constraints, reduced borrowing capacity and the perceived value units offer will help steer buyer demand to affordable options – likely to be both units and entry-priced houses.

The premium price-point of Melbourne’s housing market is leading the downturn as tends to historically be the case, as the inner east recorded the most significant house price decline of 6.1% over the quarter. Areas that have a higher purchase price and therefore greater debt place households in a vulnerable position to rising interest rates. Interest rate hikes and strong inflation levels continue to damage borrowing capacity, already adding $726 a month to a $1 million home loan.⁴ This will weigh on buyer sentiment, placing a brake on housing demand and price. To date, Melbourne’s housing downturn has not gained momentum irrespective of the aggressive hikes in interest rates over recent months although the risks remain. Currently, the total advertised supply is sitting 7% higher than last year and 18% above the five-year June average – shifting the balance of power to buyers. At the same time, new listings have also started to track lower, indicating home owners are not rushing to sell as housing conditions cool and home loan rates rise but rather choosing to wait. It suggests that the build-up of supply is down to a pullback in the number of sale transactions. Selling conditions have become more challenging, clearance rates have weakened to an almost two-year low of 58% over the June quarter and overall properties are spending longer on the market.

³ Based on price change over the June quarter.
⁴ Domain Home Loans, based on Domain Home Loans Repayment Calculator. The approximate amount monthly home loan repayments have increased based on the cumulative interest rate rises of May, June and July. Based on a 30-year principal and interest loan with an initial 3.5% interest rate. Information is intended as a guide only. Fees and charges excluded.

Prices hit new record highs but growth slows

• House prices hit another new record high of $840,594 after rising 0.2% over the quarter and 24.7% over the year. The pace of price growth has slowed suggesting the strongest upswing in 18 years has lost momentum.
• Unit prices rose 1.4% over the quarter to reach another new record high, at $448,383. The pace of price growth has slowed suggesting the strongest upswing in 14 years has lost momentum.
• Brisbane is one of only two capital cities to have record high house and unit prices.

Brisbane house prices have risen by almost $167,000 and units by $40,000 over the 2021-22 financial year to reach new record highs of $840,594 and $448,383 respectively. This makes Brisbane one of only two cities to have house and unit prices at a peak. Although there is mounting evidence that the steepest upswing in 18 years for houses and 14 years for units has lost some momentum. House price growth virtually stalled over the June quarter and unit price growth was roughly half of the previous quarter, slowing down the annual rate of growth. It remains comparatively lower than late 2021 and early 2022 providing further proof that the peak rate of quarterly (December 2021) and annual price growth (March 2022) is behind for houses and units. There were some clear shifts in trends over the June quarter, demand had been focused on houses throughout this upswing and they are still rising more than two times faster than units annually. However, it is the first time in almost two years that unit prices have recorded a stronger rate of quarterly growth than houses. Units are being placed in the spotlight for a combination of reasons: affordability constraints, increased investment activity and reduced borrowing capacity.

The changing market dynamics are also being driven by a rebalancing of supply and demand. Home owners have reacted to record pricing with the highest volume of new listings over the three months to June since 2018 and they are 6% above the five-year average. This made for the busiest June quarter on record for Brisbane’s auction market. The total number of advertised homes for sale remains 30% below the five-year average and 13% lower annually. While this gives the impression that demand is running ahead of supply, buyers will find the choice is improving from the January low and has been tracking higher across most months this year. The number of potential buyers per listing has also eased from the peak in early 2022, although still remains heightened. There is no doubt that demand for Queensland property remains stronger compared with other capital cities, however buyer conditions are loosening.

Sunshine Coast

• The steepest house price since 2003 came to an abrupt halt over the June quarter. House prices declined for the first time in just over three years, down 2.4%. This is the deepest quarterly decline since 2011.
• House prices still remain at the significant seven-digit milestone, now at $1 million.
• Unit prices declined 1.8% over the quarter to $655,000. This is the steepest quarterly decline in three years.

Gold Coast

• House prices hold at the record high achieved last quarter, at $950,000. This breaks the eight consecutive quarters of house price gains and signals the strongest upswing since 2004 is on the cool.
• Unit prices nudge 0.1% higher over the quarter to a new record high of $600,500. They are 17.3% higher annually.
• The number of potential buyers per listing has eased from the peak hit in September 2021, although still remains heightened.

Unit prices grow faster than houses

• House prices increased for the eighth consecutive quarter by 3.6% to a new record high of $793,220. They are 27.4% higher annually.
• Unit prices reached a new record high of $398,921, up 4% over the quarter and 15.6% over the past year.
• Quarterly unit price growth is higher than house prices for the first time in almost two years.
• Momentum in Adelaide’s house price upswing has eased with growth roughly half that seen in the previous quarter and same time last year.

Adelaide is the fastest-growing capital city market in Australia over the 2021-22 financial year with house prices jumping 27.4%, adding around $170,000 to reach a new record high of $793,220. At the same time, Adelaide units have been the second-fastest growing capital city rising $54,000 to $398,921. This makes Adelaide one of only two cities to have house and unit prices at a peak, along with Brisbane. It is the eighth consecutive quarter of house price gains and the sixth for units. This means home owners have witnessed a new record house price every quarter for the past two years. However, the upswing continues to lose steam as quarterly house price growth has roughly halved compared with the previous quarter and versus the same quarter the year prior. This means that the steepest upswing in Adelaide’s house price history is on the slowdown with the peak rate of quarterly and annual house price growth now past. There were some clear shifts in trends over the June quarter, it is the first time in almost two years that unit prices have outperformed houses. The pace of unit price growth has risen both over the quarter and annually – bucking the house price trend. It follows a period of substantial outperformance of house prices, which rose 47% from the trough to the current peak, while unit prices rose about half of this during the same period. Units are being placed in the spotlight for a combination of reasons: affordability constraints of purchasing a house, increased investment activity and reduced borrowing capacity.

Let’s be clear – buyer demand still remains strong. The number of homes sold is a whopping 24% above the five-year June quarter average. It was the second-busiest June quarter on record behind last year’s with only 4% fewer sales. Choice still remains a challenge with the total number of advertised homes for sale 30% below the five-year June average and 16% lower annually. There has been a key change, buyers will find that choice has continued to improve from the January low. The number of potential buyers per listing has also eased from the peak in early 2022, meaning there is less competition between buyers than there once was. With an easing playing out across Adelaide’s auction market, it was the busiest June quarter on record but the clearance rate has slipped to an 18 month low of 65%.

Unit prices at a new record high

• House prices increased 1.8% over the quarter to $1.15 million. This recouped part of the value lost last quarter, however they remain 0.9% below the peak price reached at the end of 2021. It has slowed the annual rate of growth to an 18-month low.
• Unit prices jumped 4.4% over the quarter to a new record high of $599,735. They are up 5.6% annually.
• For the first time since 2012, Canberra is the second most expensive capital city to purchase a unit. It remains the second most expensive capital to purchase a house.

It was a quarter of changing trends for Canberra’s housing market – house prices were on the rise again and unit prices scored a new record high. While the lift in house prices did partly reverse the decline of the previous quarter, they remain just over $10,000 below the December 2021 price peak. Eased conditions are still evident, house prices remain below peak price and the annual growth rate has eased to an 18-month low. In comparison, unit price growth gained pace, reversing all the decline of the previous quarter to reach an all-time high of almost $600,000. For the first time since 2012, Canberra is the second most expensive capital city to purchase a unit. It remains the second most expensive capital to purchase a house. The stronger outcome of units follows a period of outperformance of house prices, which rose 50% from March 2020 to the peak in December 2021. While unit prices rose only 29% from March 2020 to the current peak. This stark growth difference drove a record price gap but this is now narrowing as house prices rise twice as fast as unit prices over the quarter.

Affordability constraints, reduced borrowing capacity and the value of owner-occupier first home loans hitting a high are all helping to steer buyer demand towards units.⁵ Investors also remain an active buyer segment as they chase a tight landlords’ rental market and favourable rental returns.⁶ However, demand has eased with the value of investment and owner-occupier home loans below early 2022 peaks.⁷ This is helping to shift balances between supply and demand. The total volume of homes for sale is improving from the low earlier in the year, although it remains 24% below the five-year June average. Buyers will find they are facing less competition as the volume of potential buyers per listing has been tracking lower since the September 2021 peak. Clear shifts are playing out across the Canberra auction market: It was the busiest June quarter on record but clearance rates have dropped to a two-year low of 65%.

⁵ABS Lending Indicators, ACT value of home loans excluding refinancing, seasonally adjusted, monthly time series, latest May 2022.
⁶ABS Lending Indicators, ACT value of home loans excluding refinancing, seasonally adjusted, monthly time series, latest May 2022.
⁷ABS Lending Indicators, ACT value of home loans excluding refinancing, seasonally adjusted, monthly time series, latest May 2022.

House prices reach another record high

• House prices rose 1.4% over the quarter to a new record high of $651,956, rising 8.4% over the past year.
• Unit prices declined for a second quarter by 1.1% to $356,904. This is the steepest annual fall in three years, at 5.9%.
• Perth remains the most affordable city to purchase a unit due to it having the weakest unit market of all the cities.
• There is a record price gap between houses and units, at 83% or about $295,000.
• Perth bucks the national trend to become one of only two cities to record stronger quarterly house price growth than units, along with Hobart.

Perth’s housing market milestone nudged further over the June quarter to record a new record high at $651,956. This means Perth is no longer Australia’s most affordable city to purchase a house, overtaking Darwin. House prices have been rising annually for the past two years. Despite this, house price growth continues to lose momentum with quarterly growth roughly half that of the previous quarter. The peak rate of house price growth occurred back in late-2020 on a quarterly basis and annually in mid-2021. However, house prices have consistently outperformed units as the growth rates are now heading in opposite directions – bucking the national trend. Unit prices dipped for the second consecutive quarter to produce the steepest annual decline in three years. A divergence that is widening the record price gap between property types. The median house price is now 83% higher than the median unit price, with a dollar premium of around $295,000. This is up from 52% before the pandemic, or almost $182,000. This does make Perth the most affordable city to purchase a unit – a title recouped in 2022 for the first time in 20 years.

Buyer demand remains elevated with the volume of properties sold over the June quarter 14% above the five-year average. The balance between supply and demand is changing. On the demand side, the number of owner-occupier home loans financed has reduced 18% from the 2021 peak, and dropped by 40% for owner-occupied first-home buyers.⁸ At the same time, the value of investment loans has been rising as investors chase a tight landlords’ rental market and favourable rental returns.⁹ On the supply side, more home owners are reacting to rising prices and putting their homes up for sale. The volume of newly advertised homes for sale over the June quarter is 29% higher than the five-year average. This is helping to shift market conditions as the total volume of homes for sale is improving from the 2021 multi-year low, although it remains 15% below the five-year June average. Buyers will find they are facing less competition as the volume of potential buyers per listing has been tracking lower since the peak earlier this year.

⁸ABS Lending Indicators, WA the value of new home loans excluding refinancing, seasonally adjusted, monthly time series, latest May 2022.
⁹ABS Lending Indicators, WA value of home loans excluding refinancing, seasonally adjusted, monthly time series, latest May 2022.

House price growth four times slower

• House prices rose 0.8% over the quarter to a new record high of $766,010. This is the eighth consecutive quarter of growth although the pace is four times slower than the previous quarter.
• Unit prices increased 0.5% over the quarter to $555,884. While this partly reverses some of last quarter’s fall, they remain 1% below the December 2021 price peak.
• Annual growth has lost momentum, providing the slowest pace in 15 months for houses and 12 months for units, at 21% and 13.6% respectively.

Record-breaking house prices have been a persistent feature for Hobart over the past two years. It has provided home owners with the strongest equity boost since 2004, which peaked at an annual growth rate of almost 32% in December 2021. Although there is mounting evidence that the steepest upswing in 18 years is rapidly losing momentum. House price growth was four times slower over the June quarter than the previous. Annual growth has slowed to the lowest pace in 15 months for houses and 12 months for units. This suggests that Hobart’s housing market has moved through its peak growth rate in 2021. Buyer demand is softening with the value of new owner-occupied home loans 10% below the 2021 peak and first-home loans 40% below the 2020 peak.¹⁰ At the same time, the value of investment loans hits a high in 2022 as investors chase a tight landlords’ rental market and favourable rental returns.¹¹ Together with a strong flow of new listings and an eased demand, the total number of advertised homes for sale has been building, providing buyers with the greatest amount of choice since early 2020. It is significantly higher than the same time last year and 7% above the five-year June average. This means that homes are being listed for sale quicker than they are being purchased resulting in total supply tracking higher. Buyers will find they are facing less competition as the volume of potential buyers per listing that peaked late in 2021 has since been tracking lower.

¹⁰ABS Lending Indicators, Tasmania value of home loans excluding refinancing, seasonally adjusted, monthly time series, latest May 2022.
¹¹ABS Lending Indicators, Tasmania value of home loans excluding refinancing, seasonally adjusted, monthly time series, latest May 2022.

House and unit prices are on the rise again

• House prices increased by 0.3% over the quarter to $632,071. They are 3.6% higher than the same time last year.
• Unit prices rose by 3% over the quarter to $390,265, up 22.5% annually.
• Unit prices have outperformed houses for the past four consecutive quarters.

House and unit prices were on the rise again over the June quarter although it is unlikely to be a sign of momentum building. It is still evident that the peak rate of growth has passed. A number of key metrics highlight that market dynamics have altered. Home owners have reacted to the stronger market conditions with new listings 12% higher annually and soaring 60% above the five-year average for a June quarter. Demand for Darwin property is strong as the number of homes sold remains extremely elevated for the time of year, with the number of sales 12% higher annually and soaring 72% above the five-year average. However, the total number of advertised homes for sale has been building, providing buyers with the greatest amount of choice since 2019. This means that homes are being listed for sale quicker than they are being purchased resulting in total supply tracking higher. Buyers will find they are facing less competition as the volume of potential buyers peaked early in 2021 and remains significantly below. This is creating more options for buyers and ensuring realistic seller price expectations.