Australia’s housing downturn has slowed further in November, with home prices declining 1% in what was the smallest monthly fall since June. 

CoreLogic found that while values were continuing to trend lower, the rate of decline had consistently moderated since August. Home prices had fallen 7% from the market peak in April this year.  

CoreLogic’s research director Tim Lawless said the easing in the rate of decline was mostly emanating from the Sydney and Melbourne markets, but was also evident across many of the smaller capitals and most regional markets.   

Lawless said the Sydney’s monthly rate of decline was -1.3% in November, slower than the -2.3% decline recorded three months ago. 

“Potentially we are seeing the initial uncertainty around buying in a higher interest rate environment wearing off, while persistently low advertised stock levels have likely contributed to this trend towards smaller value falls,” Lawless said.  

“However, it’s fair to say housing risk remains skewed to the downside while interest rates are still rising and household balance sheets become more thinly stretched. 

“There is still the possibility that the pace of declines could reaccelerate, especially if the current rate hiking cycle persists longer than expected.  

“Next year will be a particular test of serviceability and housing market stability, as the record-low fixed rate terms secured in 2021 start to expire.” 

The Perth and Darwin markets were yet to record any signs of a material reversal in housing prices. 

“A comparatively healthy level of housing affordability, along with tight labour markets and relatively strong economic conditions, have helped to insulate these cities from the downturn so far,” Lawless said. 

Sydney home values remained 10.3% above pre-COVID levels, despite values falling through the downturn to-date by 11.4%. 

Due to a weaker upswing, Melbourne values were only 2.8% above where they were at the onset of COVID.   

If housing values continue to fall at the current pace of -0.8% month-on-month, Melbourne’s dwelling values could fall to pre-COVID levels by March next year. 

Most of the other capital city and broad rest-of-state regions are still recording dwelling values at least 25% above March 2020 levels.