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Putting Brisbane’s Home Price Falls Into Perspective

Original article in Sunday Mail – 5th February 2023
Written by Angus Moore | PropTrack Economist

Property price falls may have been dominating the headlines recently, but for buyers, sellers and owners it’s important to put those declines in context. So first, what has happened to prices?

Rising interest rates and the subsequent impact on borrowing costs and capacities have weighed on home values. National home prices have been falling since March 2022 and they fell a further 0.1 per cent in January, according to the PropTrack Home Price Index. Nationally, prices have fallen 4.5 per cent since their peak.

Prices have held up a bit better in Brisbane so far, though Brisbane hasn’t been immune. Prices have fallen 3.8 percent since April. It is important to put the price falls we’ve seen to date in a historical context. These price falls come after an extremely strong year in 2021. Across 2021, prices nationally grew 23 per cent. In Brisbane, prices grew even quicker – an eye-watering 31 per cent. That was an exceptionally strong  year and the third fastest year of price growth nationally in 140 years, and it was the strongest year since 1989.

While anyone who bought at the start of 2022 has seen prices fall relative to when they brought, most people brought before them. Between January and March 2022  = the point where prices peaked – Only about 140,000 homes changed hands across Australia. That’s just 1.3 per cent of Australia’s more than 10.7 million homes. Those who bought earlier, particularly if they bought before 2021, have benefited from that huge surge in prices in 2021.

The other important context is that home prices can and do fall, sometimes by quite a bit. At least so far the current downturn in Brisbane is still a little shorter and quite a bit shallower than some downturns. Prices have fallen 4.5 per cent so far in this downturn; during the 2010-11 downturn, prices declined 7.3 per cent. Prices fell by more in 2008 after the Global Financial Crisis. That said, prices are likely to keep falling this year. Some households could see their home value fall from when they bought, but given the strong growth in 2021, many homeowners will still be sitting on strong gains in equity.