Since the Reserve Bank (RBA) started hiking interest rates in May this year, the record growth in property prices finally started to ease - but that might turn around next year.
The CoreLogic Best of the Best report found that, if interest rates continued to climb next year, property prices could continue to fall, but the rate of falls should slow down.
CoreLogic head of research Eliza Owen said we may have already moved past the peak of home value declines.
“As we move into 2023, there continues to be a mix of headwinds and tailwinds for housing market performance,” Owen said.
“With expectations that the bulk of the rate-tightening cycle occurred in 2022, housing value declines could find a floor in the new year.
“However, the extent of the floor in values could be further weighed down by mortgage serviceability risks, particularly for those rolling out of record-low fixed mortgage rates through the second half of the year.”
Biggest price gains and falls in 2022
Suburbs across NSW's Richmond – Tweed region, which were impacted by both rising interest rates and damaging flood events, dominated the list for largest annual house value declines, while decreasing unit values across QLD's Townsville also featured heavily.
Popular lifestyle markets such as the Southern Highlands and Shoalhaven, the Illawarra - south of Sydney - as well as South-East Queensland's Sunshine and Gold Coasts recorded some of the strongest peak-to-trough declines in value.
CoreLogic economist Kaytlin Ezzy said, despite the declines, it was unlikely these markets would fall below the levels recorded at the beginning of COVID, given that dwellings across these regions were, on average, still 38 per cent higher than where they were at the onset of COVID-19.
“[In Sydney] houses in Narrabeen, Surry Hills, and Redfern recorded the most significant falls in value over the year, down more than 25 per cent, while unit values in Centennial Park and Mona Vale fell by 23.1 per cent and 20.8 per cent respectively,” Ezzy said.
“At the other end of the scale, Adelaide suburbs dominated the list for strongest annual appreciation in value across both property types, with house values across Davoren Park rising by 34.7 per cent, and unit values in Seacliff Park 41.4 per cent above the levels recorded this time last year.”
***Source: Eliza Bavin - Yahoo Finance