Real Estate Investment:Today

Property prices fall for the first time since early 2020

Key takeaways

The PropTrack report shows that prices were flat in regional areas in May, representing a sharp slowdown and the lowest month-on-month increase since May 2019.

National property price growth has now dropped for the first time since the Covid-19 pandemic began back in early 2022. 

While Australia’s property market started strongly in 2022, an increasing cash rate and concerns about inflation saw property price growth drop across capital cities for May for the first time since the Covid-19 pandemic began in early 2022.

Nationwide, property prices dropped 0.11% in May to a new median of $691,000, according to the latest PropTrack Home Price Indicator report.

Prices continued to decline in Sydney (-0.29%) and Melbourne (-0.27%), while prices in Canberra were down for the first time in 3 years.

Price Fall3

And monthly price growth has slowed almost everywhere across the country, with regional areas seeing a flat result in May with a mere 0.01% increase for the month.

“This fall follows the first interest rate increase by the Reserve Bank of Australia (RBA) in early May, but home price growth has slowed considerably throughout 2022,” the report’s author, REA economist Paul Ryan, said.

“It follows expectations of sharply higher interest rates later in 2022 as the RBA acts to dampen inflationary pressures.”

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But while the data may be alarming for some, Ryan also adds that this fall follows the third-fastest episode of property price increases in Australia’s history.

Prices were up 14% in the year to May, and up 35% since March 2020.

“Prices adjusted quickly to the reduction in borrowing costs as the pandemic shocked the economy and interest rates fell to their lowest level on record,” he said.

Regional areas outperform

The PropTrack report shows that prices were flat in regional areas in May, representing a sharp slowdown and the lowest month-on-month increase since May 2019.

But what is interesting is that despite the flat result, the data shows that regional areas still outperform capital cities thanks to relative affordability and the sea- and tree-change trend which exploded during the pandemic as owners and would-be buyers shifted their preference to lifestyle locations.

And this is evident in the data too.

Prices have increased 21% in the 12 months to May in regional areas, but only 12% in the capitals.

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Ryan adds that the strength in regional areas has been particularly evident in NSW, Queensland, and Tasmania, where growth has been around 23% outside the capitals over the past year – but the smaller capitals of Brisbane and Adelaide have also seen strong growth off the back of the same trends.

Highest growth regions

Parts of Brisbane – particularly peripheral parts of the city – feature prominently in the highest growth regions over the past year across the nation.

And regional parts of NSW have also seen exceptional growth.

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