CoreLogic’s daily dwelling values index shows that Sydney home prices have now fallen 14% from their mid-February 2022 peak, with nearly all of this decline occurring after the Reserve Bank of Australia (RBA) first hiked interest rates in early May 2022:
Sydney home values have collapsed in response to the RBA’s aggressive rate hikes.
The current downturn ranks as the second fastest in the city’s history behind the 1982-83 bust, according to CoreLogic. By the end of this month, it will also overtake the 2017-19 correction (-14.9% over 22 months) to be the second largest downturn in recorded history:
Sydney’s current house price bust is the second fastest on record.
Sydney home values have fallen at a swift pace of 3.9% over the most recent quarter. This suggests that Sydney’s current downturn should overtake the 1982-83 bust to be the biggest on record by the end of April:
Sydney home values continue to fall at a rapid pace.
Sydney is Australia’s most expensive housing market and its households carry the nation’s biggest mortgages.
As such, Sydney is experiencing the nation’s deepest price decline following the RBA’s ultra-aggressive monetary tightening.
It seems inevitable that Sydney home values will fall by at least 20% peak-to-trough over this cycle.
The RBA is certain to hike the official cash rate further on Tuesday, with further increases possible over following months.
Moreover, nearly one quarter of mortgages (by value) will this year reset from ultra-cheap fixed mortgages to rates that are at least double their current level. Accordingly, the severe financial strain caused by the fixed rate mortgage reset may drive a wave of distressed home sales, pulling prices even lower.
Both factors are bad news for Sydney property prices in 2023.
