The housing boom in Sydney and Melbourne seems to be over, with house prices in both cities falling last month, despite a national uptick in the monthly growth rate.
Australian home prices rose an average of 0.7 per cent in March, with the middle-priced dwelling valued at $738,975.
However, prices in Sydney and Melbourne fell by 0.2 per cent and 0.1 per cent respectively, and their growth rates in the March quarter were lagging well behind other capital cities.
"It does look like the boom is over in both of those cities," CoreLogic’s research director, Tim Lawless, told the ABC.
"In fact, we are now seeing those markets either right at the top of their cycle and about to start to move into a consistent downturn, or potentially already moving into a downturn.
In February, Sydney — where housing prices were the most unaffordable — posted its first fall in 17 months.
Property is still more expensive than ever
Although property markets such as Sydney and Melbourne may now be starting to cool, the pandemic boom has left ownership more inaccessible than ever for many prospective first home buyers.
Shae Soden is one of the lucky young Australians with a sizeable deposit saved.
The 26-year-old has been saving without any assistance throughout the pandemic and is now actively searching for her first house in outer-east Melbourne.
"It's been an emotional roller coaster. Some days, you get very close to a house and the next day it's gone," she told the ABC.
"I'm going up against people [who] are planning to demolish the house or planning to build units on top.
Ms Soden said she had mixed feelings about predictions that Melbourne’s property market might now enter a downturn over the coming years.
“Am I buying at a peak, and not going to make much money over the next couple of years, if I want to sell it later on?” she wondered.
CoreLogic’s Mr Lawless said the annual growth trend would fall sharply over the coming months, as the strong gains recorded in early 2021 drop out of the 12-month calculation.
He noted that the national annual growth rate (18.2pc) had fallen below the 20 per cent mark for the first time since August last year, while national housing turnover was also easing, with preliminary transaction estimates for the March quarter tracking 14.3 per cent lower.
The national slowdown was also backed by a new index from REA.
According to REA's PropTrack Home Price Index, price growth slowed further in March, increasing by just 0.34 per cent, the slowest pace of growth since May 2020.
Regional, smaller capital city markets remain strong
However, there were exceptions to the slowdown and regional Australia continued to show resilience.
Regional property values increased by 5.1 per cent in the March quarter — compared with the 1.5 per cent increase recorded across the combined capital cities — thanks to population growth in the regions.
This week, the Australian Bureau of Statistics (ABS) revealed that the population of regional Australia grew by 70,900 people during 2020-21 — in contrast to a decline of 26,000 for the capital cities — mostly due to a sharp drop in Melbourne and, to a lesser extent, Sydney.
Prices in Brisbane and Adelaide also went up by 2 per and 1.9 per cent in March, while Perth and Canberra both gained 1 per cent, showing a multi-speed market emerging across capital cities.
But that has left many young people such as Shaylee Leach out of the home ownership market altogether.
Ms Leach initially investigated buying her first home in Adelaide just before the pandemic hit in early 2020.
Even then, she did not know how she would manage to do it.
Now, Adelaide's market is booming, as people moved to the historically more affordable city during the pandemic.
It also has a smaller housing stock, which means a lack of supply can push up prices more easily.
In just 12 months, property prices in the City of Churches have risen by an eye-watering 26 per cent.
That takes the median dwelling price to $600,000.
While that is much cheaper than Sydney and Melbourne, Ms Leach says she feels more behind than ever when it comes to buying a property.
Rising rental markets pose a challenge
The 30-year-old lost her work in the arts and events industry during the pandemic and is now just getting back on her feet financially.
"It feels really surreal and it feels really devastating, but it also just feels really gross," she said.
While property prices seem to be levelling off after the steep rises of the past two years, it's a different story for the rental market.
"We're now really starting to see some very strong upwards pressure on unit rents, whereas house rents are starting to flatten off, again, probably due to affordability constraints for renters," Mr Lawless said.
In Adelaide, rents on new leases have gone up 3.8 per cent in the last quarter alone, which is slightly higher than the national average.
"Our rent has been steadily going up and I'm a little bit scared that, maybe, one day, the landlord will just want to turf us out so that they can raise the rent by another $100," Ms Leach said.
More assistance for first home buyers who do not have a 20 per cent deposit was announced in this week's budget.
However, experts were mixed about whether this would help those who most need it, as it could also push up prices.
Ms Leach said she wanted wage growth increased and caps put on the number of properties that investors can own.
"I don't think anybody should be allowed own four houses," she said.
