Did the property market actually peak last March?

by Mike Wood14 Jan 2022

New data has revealed what many brokers had long suspected: the property market in Australia has finally peaked.

CoreLogic has recorded a plateau in Sydney, with just 0.3% of growth rate in prices in December 2021, while Melbourne’s market actually dropped slightly, with a 0.1% declining rate in prices.

These numbers are to be compared with a rises of 3.7% and 2.4% respectively in March, the highest single month jump that was recorded in the peak year of 2021.

Numbers in Queensland and Adelaide continued to grow, reflecting their lower starting point as markets.

CoreLogic’s research director, Tim Lawless, was quick to point out that there was a difference between the peak price – which is unlikely to fall or even stop growing – and the growth rate, which compares the momentum of a property market.

Read more: Are planning problems set to derail price growth in NSW?

“To categorise a market peak across a region, we would generally be looking for a consistent trend in negative monthly movements,” he said.

“Although we can’t see any evidence that specific housing markets have peaked, it is clear that most markets have moved through a peak rate of growth,

“What I mean by that is the point at which markets achieved their biggest monthly growth rate. We saw most of the capitals moved through a peak rate of growth around March last year.”

This crucial difference has been seen already this year: property prices in Sydney have grown consistently for several years, but only actually overtook their previous real term value peak (set in 2017) in March.

As they have continued to grow since then, it could be argued that the market is yet to peak, but for brokers and buyer’s agents, the meaningful peak is that at which growth begins to slow down.

Lawless said that the market price peak might well come when outside factors create a real terms fall in value.

The property market peak, explained

That may be when interest rates and lending policies inhibit the ability to borrow, when market conditions rebalance supply ahead of demand or when macroeconomic influencers such as wages and inflation mean that people can no longer afford prices as they are.

“Arguably, the surge in COVID cases associated with the Omicron variant could push some of these policy tightening decisions back, with APRA or the RBA unlikely to tighten their policy settings with so much uncertainty associated with the latest case numbers,” he said.

“There is also some downside risk from a delayed economic recovery associated with less spending activity and heighted uncertainty, although a slower than forecast economic recovery implies rates would stay lower for longer.”