Two years of rate hikes divide housing market as almost half of capital city suburbs hit record high

Australia’s property market has become a picture of resilience and decline amidst the historic two-year rate hike cycle, with home values across the nation rising only 2.8% since April 2022, in stark contrast to the substantial 31.7% increase observed in the preceding two years, according to a CoreLogic Australia analysis.

CoreLogic Research Director Tim Lawless said the relatively small capital gain over the past two years is a legacy of the 7.5% drop in national values during the early phase of the rate hiking cycle, when the national index consistently fell between May 2022 and January 2023.

“The perception might be that property values are continually increasing but we can’t forget the short and very sharp downturn that occurred in the immediate aftermath of the first rate increases,” Lawless said.

“Since the market bottomed there’s been 15 consecutive monthly increases in values nationally, but that performance is not indicative of the entire market. Underneath the headline figure there’s significant diversity in the housing market’s performance.”

The percentage change in housing values through the rate hiking cycle to April 2024 ranges from a 25.7% surge in Perth house values to an 11.2% drop in Hobart house values, with Sydney house values increasing 0.4% in the past two years compared to Melbourne where houses are now 4.2% more affordable than they were in April 2022.

Despite rate hikes, 43.6% of Australian suburbs hit a record high at the end of April 2024, with capital city suburbs showing more resilience compared to regional areas, at 49.1% and 35.0% respectively.

“Demand for housing in Australia remains extremely high in many areas particularly with the added pressure of record high migration levels, persistently tight rental conditions and an undersupply in dwellings. These figures show buyers are determined to get their foot in the door of home ownership irrespective of rate hikes and the rising cost of living,” Lawless said.

Nine of the top 10 suburbs with the strongest house value growth over the past two years are in Western Australia, with Armadale in Perth’s south-east growth corridor topping the list with a 60.0% increase since April 2022.

However, 37.9% of suburbs nationally have recorded a decline in dwelling values since the rate hike cycle began, with Hobart suburbs hit hardest at 98.0%, followed by Melbourne at 87.8% and the ACT at 87.6%.

“Hobart and Canberra were buoyant with housing activity during the height of the pandemic but they’ve since faced a rise in listings, affordability constraints, and subdued demographic conditions such as negative interstate migration levels,” Lawless said.

In contrast, no suburbs in Adelaide and only one suburb in Perth have recorded a decline in values since April 2022.