House prices in Melbourne, Hobart and Darwin drop as the national market swells slowly

Property values across the national housing market continue to rise, but growth is slowing, and in three capital cities, prices have even started to decline.

Over the past three months, house prices in Melbourne, Hobart and Darwin have dropped, the CoreLogic Hedonic Home Value Index (HVI) for August revealed.

July was still the 18th month in a row that national property values have continued to rise — there was a 0.5 per cent increase last month, and an identical increase in the month before.

But market conditions are becoming more diverse, with quarterly house prices falling 0.9 per cent in Melbourne, 0.8 per cent in Hobart, and 0.3 per cent in Darwin.

Even the urban markets with rising property values are slowing the pace, with Sydney recording a 1.1 per cent quarterly growth, compared to the 5.5 per cent growth the capital city recorded this time last year.

Available supply is one of the key reasons behind the market trend variations, CoreLogic research director, Tim Lawless said.

“Weaker markets like Melbourne and Hobart are recording advertised supply well above average levels,” he said.

Meanwhile, stronger markets, such as Brisbane, Adelaide and Perth — which recorded a respective quarterly growth of 3.8 per cent, 5 per cent, and 6.2 per cent — have more than 30 per cent fewer homes for sale than the average for this time of the year.

These dynamics are weighing on growth in national home values, compared to the speedy pace of growth this time last year.

The home value index is up 1.7 per cent over the past quarter, compared with the 3.2 per cent increase over the equivalent period in 2023.

‘An underlying mismatch’

In addition to the available supply, population growth and the areas where investors are putting down roots have also been impacting the market trends.

“Beyond the number of homes available to purchase, the supply of newly built homes remains insufficient relative to population growth,” the CoreLogic index analysis said.

It noted “an underlying mismatch between housing supply and demand”, and also added that “investors are taking up a large share of demand.

“In WA, where home values have jumped 23.9 per cent over the year, investor lending is up 53 per cent, more than double the national average.”

Lawless said that because investors tended to seek out a maximum return on investments, it made sense that values were rising where it is typically cheaper to buy.

“It’s no surprise to see such an upswing in markets like Western Australia and Queensland, where values are rising rapidly and yields tend to be higher than the larger capitals,” Lawless said.