The reduction in the rate of decline was evident across most capital cities, except for Adelaide (-0.8%) and Perth (-0.3%) where housing values have held firmer since interest rates began rising in May. 

CoreLogic Research Director Tim Lawless said although the housing downturn remains geographically broad-based there are signs some momentum has left the housing downturn. 

“The quarterly trend in housing values is clearly pointing to a reduction in the pace of decline across most regions, however at -1.0% over the month and -3.2% over the rolling quarter, national housing values are still falling quite rapidly compared to previous downturns,” Mr Lawless said.

Every capital city posted a decline in dwelling values through the month, led by Hobart (-1.7%) and Brisbane (-1.4%), while the smallest drops were recorded in Perth (-0.3%) and Darwin (-0.1%). 

Sydney’s median dwelling value dropped below $1 million for the first time since March 2021, falling -1.2% in January, an improvement on December’s -1.4% decline.

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.

“While this trend towards improving conditions across premium markets is not evident in all cities, it is most apparent in Sydney’s detached house market. Quarterly declines in this market segment 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,” Mr Lawless said.

Through January, regional housing values continued to record a milder rate of decline than each of their capital city counterparts, a trend seen through most of the downturn to-date. 

The milder decline comes after a substantially stronger upswing. Across the combined non-capital city 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.

“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,” Mr Lawless said.

"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.”

January marked a new record for how much and how fast dwelling values have fallen in Australia.  Based on the monthly index, the national HVI is down -8.9% since peaking in April last year, making this the largest and fastest decline in values since at least 1980 when CoreLogic’s records began. 

So far, Brisbane (-10.8%*) and Hobart (-10.8%) have registered the largest declines on record for those cities. Sydney home values are down -13.8% and not far from surpassing the 2017-19 drop of -14.9% to set a new decline record.

However, Mr Lawless stressed the importance of understanding this downturn in context.

“Record declines in home values follow a record upswing, both in magnitude and speed. The national HVI was up a stunning 28.6% in the space of just 19 months,” he said.

“Despite the recent sharp drop in values, every capital city and rest-of-state region is still recording home values above pre-pandemic levels, although Melbourne’s index would only need to fall a further -0.4% before equaling the March 2020 reading.”

*Brisbane's decline to date of 10.8% is calculated based on movements in the Daily HVI

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