High-priced homes across the nation losing their value

AUSTRALIA’s most expensive homes are leading the housing downturn, with top-tier homes in Sydney and Melbourne now more than 10 per cent below their peaks.

Lower-priced homes and units, however, show greater resilience, according to Cotality’s September Housing Chart Pack.

It shows upper-quartile house values are now 10.7 per cent below peak in Sydney and 10.5 per cent lower in Melbourne.

§ Downturn spreads beyond premium markets

Gerard Burg, Cotality head of research, said the downturn has broadened over time, spreading beyond the premium markets where it first emerged.

“Early in the cycle, falling home values were largely confined to higher-priced properties in Sydney, Melbourne and Canberra,” he said.

“More recently, however, home values have also started declining across Brisbane, Adelaide and Perth.”

Burg said the timing and scale of declines varied across cities.

“Higher-value dwellings in Sydney, Melbourne and Canberra were the first to turn and continue to record the largest cumulative falls,” he said.

“Upper-quartile houses in Sydney and Melbourne are now more than 10 per cent below their cyclical peaks, underscoring the role premium housing has played in driving the downturn.

“In contrast, price declines across Brisbane, Adelaide and Perth have been more evenly distributed across value segments, reflecting their later entry into the downturn.”

§ Canberra's lower-value units record larger declines

However, Burg noted there were exceptions to the broader trend.

“Canberra’s unit market has bucked the pattern, with lower-value units recording larger declines than their higher-value counterparts,” he said.

“Lower-quartile unit values in Canberra are down 2.9 per cent from peak levels compared with a decline of 1.6 per cent across the upper quartile.”

§ Housing value gaps widest in Melbourne and Sydney

The divergence between upper and lower-value housing remains most pronounced in Melbourne and Sydney.

The gap between cumulative declines across upper and lower-quartile houses has reached 6.6 percentage points in Melbourne and 5.3 points in Sydney.

By comparison, the difference is less than one percentage point in Perth, Adelaide and Brisbane.

§ Units show greater resilience, with some exceptions

Burg said a similar trend was evident across the unit market, although the differences between value segments were less pronounced than for houses.

“Units have generally proven more resilient throughout the downturn, supported by their relative affordability and lower entry price points,” he added.

“While higher-value units have generally recorded larger declines than lower-value stock, the gap is smaller than what we are seeing across detached housing.”

The difference between upper and lower-quartile unit declines is widest in Melbourne and Sydney at 4.9 and 4.5 percentage points respectively, compared with 2.6 points in Adelaide, 1.4 points in Brisbane and 1.3 points in Perth.

However, there were some notable exceptions.

“Perth’s unit market has recorded larger declines than houses across every value segment, while upper-quartile units in Adelaide have fallen further than upper-quartile houses.”