• Australia’s median capital city home price has fallen 10.3% since peaking in September 2017, making the current downturn one of the largest on record.
• In real, inflation adjusted terms, capital city prices have fallen by an even larger 11.7% over the same period.
• Median prices in Perth and Darwin have fallen more than 30% from the highs seen last decade. Sydney, Brisbane and Melbourne have also recorded real price declines of 11% or more.

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Australia’s median capital city home price has fallen 10.3% since peaking in September 2017, making the current downturn one of the largest in both in percentage terms and duration.

Prices have “corrected”, to borrow a financial markets term.

While the declines have not been evenly spread across the country as homeowners in Perth and Darwin, and more recently Sydney and Melbourne, undoubtedly know, the falls have been even larger when inflation is taken into consideration.

This chart from CoreLogic underlines that point.

It shows how far median prices have fallen across the capitals since peaking in real, inflation-adjusted terms.

While the median capital city home price nationally has fallen 10.3% in nominal terms, in real terms, the decline has been even larger at 11.7%. And that’s before holding costs such as mortgage repayments, council rates and other property-related charges are taken into consideration.

For homeowners in Perth and Darwin who bought their home during the twin mining commodity price booms either side of the GFC, median prices have fallen 37.2% and 34.5% respectively in real terms since both markets peaked.

Both are record declines in real price terms.

Sydney, Brisbane and Melbourne, while smaller in scale to the mining capitals, have also seen median values slide over 11% or more in real terms since peaking.

According to CoreLogic, the current downturn in Sydney is the largest in real terms since prices fell 17.4% between late 2003 to late 2008. The largest real decline in Australia’s largest and most expensive housing market was 20.1% between March 1989 and March 1991, just before Australia’s last recession hit.

Given current nominal price trends in Sydney, and even with weak inflation, there’s a chance that record could be broken in the coming quarters.

In Melbourne, it will take quite the collapse in prices, or a spike in inflation, to test the record real decline of 27.4% set between March 1989 and December 1995.

While Brisbane prices have fared better in nominal terms than its neighbours to the south in recent years, real prices peaked in the Queensland capital substantially earlier, resulting in a similarly-sized decline from its respective peak.

Although nominal price falls have slowed in recent months, CoreLogic expects further declines over the remainder of the year.

“With dwelling values expected to continue to fall throughout 2019, real dwelling values will fall even further away from their previous peaks,” said Cameron Kusher, Research Analyst at CoreLogic.

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