Since 2004, each subsequent national housing downturn has been deeper than the previous peak to trough decline, Mr Lawless said.
“Since the late 1980s, national downturns have ranged in severity from a 1 per cent peak to trough decline in 2015/16, which was a temporary correction brought about by the first round of credit tightening via APRA’s 10 per cent speed limit on investment lending, to an 8.4 per cent decline during the 2017-19 downturn,” he said.
Perth’s 20 per cent drop
“On a more granular capital city level, the largest downturns have been following the mining boom in Perth and Darwin where housing values in Perth fell by 20 per cent over 64 months, while in Darwin, values fell a larger 32.7 per cent over 69 months. Although both downturns were preceded by a spectacular upswing in values.”
The duration of the downturns had also lengthened since the GFC-led correction in 2008-09, which lasted for 10 months.
During the 2010-2012 downturn, prices had fallen for 18 straight months, and they dropped for 19 months during the 2017/19 correction before bottoming, CoreLogic data shows.
As such, the recovery could also take years, if it follows the 2017-2020 housing slump where prices took three years and three months (39 months) to bounce back from the bottom.
So far, there were no signs house prices have hit their peaks, Mr Lawless said.
“We aren’t seeing any of the capital city or broad ‘rest of state’ regions peaking just yet. However, there is plenty of evidence that growth rates have slowed across most of the capital cities,” he said.
Peak growth rates have passed
“To call a peak in housing values across a region, we would generally be looking for a consistent trend in negative monthly movements. To date, the quarterly trend remains positive across the major regions.”
Kent Lardner, director of Suburbtrends, said his analysis found 69 housing markets in the country had already surged past their peak growth rates. However, prices continued to rise, albeit in smaller increments.
“Markets that have peaked have a growth rate that builds up, then peaks, then starts to fall,” he said.
“In most cases, the ‘fall’ can still be a good rate of growth, although it’s just not as high as it was at the peak.
“What I expect to see in the coming months is a lot more markets hitting a peak and growth rates declining. I also expect to see the same pattern, where growth rates still remain positive but a much smaller percentage than what we have seen in 2021.”
Of the areas that have already peaked, 16 are in NSW, 15 each in Queensland and WA, six in Victoria and the rest split between the other capitals.
Among them is Sydney’s affluent council area of Ku-ring-gai on the upper north shore, where house prices had risen by just 7 per cent in the three months ended November, down from the 12 per cent growth recorded during the peak in August. During that time, inventory had risen by 33 per cent.
In Warringah, on the northern beaches, house prices have grown by a slower 10 per cent in the three months to November, a 3 percentage point drop from the peak in August when they grew by 13 per cent. Stock levels had climbed 28 per cent since the peak.
In Adelaide’s central and hills district Burnside, house price growth has dropped by 4 percentage points to 12 per cent from its October peak.
“In most cases, these markets are still performing very strongly, but appear to be past their peak,” Mr Lardner said.
“Peak in growth rate did not signal an end to good growth in most markets post-peak, but once inventory gets above a certain point, the growth rates diminished.”
Housing crash, when it comes, will last for years