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Dwelling values have started to edge down for the first time since September 2020.Credit:Peter Rae

House values in Sydney fell by 1.1 per cent with the median value now sitting just above $1.4 million. Over the quarter,values have edged down by 1.3 per cent but over the past year they are still up by 12 per cent.

Values of units in the harbour city fell by 0.7 per cent in the month to be down by 1.6 per cent over the quarter.

In Melbourne,house values fell by 0.8 per cent with the median value now at $992,000. Over the quarter,they have fallen by 1.3 per cent but over the year they are still up by 6.9 per cent.

Canberra values fell by 0.4 per cent in the month but remained 1.8 per cent up over the quarter and 18.6 per cent over the year with the median house value sitting above $1 million.

Other capital city values lifted. In Brisbane,they rose by 0.8 per cent with the annual rate now at 30.2 per cent. Brisbane’s median house value is at $885,000.

Across the Nullarbor,Perth’s values increased by 0.6 per cent,taking the median value to $583,000.

CoreLogic research director Tim Lawless said the quarterly rate of growth for national dwelling values had peaked in May 2021,around the time consumer sentiment and when banks started to push up their fixed term mortgage rates.

He said the recent rise in variable interest rates was on top of longer term issues hitting the market.

“Since then,housing has been getting more unaffordable,households have become increasingly sensitive to higher interest rates as debt levels increased,savings have reduced and lending conditions have tightened,” he said. “Now we are also seeing high inflation and a higher cost of debt flowing through to less housing demand.”

The Reserve Bank is expected to lift the official cash rate at its board meeting next week with a 0.4 percentage point increase possible. Financial markets expect the bank to follow up that increase with several more this year.

Mr Lawless said any further falls would be offset by key mitigating factors.

“Labour markets are tightening,sending the unemployment rate to generational lows and placing additional upwards pressure on wages growth,” he said. “As income growth outpaces housing values,the home deposit hurdle will gradually lessen,reducing one of the key barriers to entry for home buyers.”

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