During the global financial crisis in 2008 to 2009, house prices dropped by 7.4 per cent from the peak and lost 6.3 per cent during the 2010 to 2012 downturn.
More weakness to eat
With further interest rate rises expected in the coming months, house prices will continue to soften, Ms Owen said.
“I think we’re going to see more weakness to come. We could even see the national housing values reaching a double-digit decline,” she said.
“Ongoing increases in interest rates will further erode the borrowing capacity, and likely prolong the country’s housing downturn until interest rates stabilize.”
The Reserve Bank of Australia is expected to lift the cash rate by 0.25 percentage point at its February 7 policy meeting to 3.35 per cent from 3.1 per cent.
Economists are expecting another 0.25 percentage point increase by June before it pauses to assess the fixed-lending cliff that awaits borrowers.
The country’s largest capital cities led the sharpest peak-to-trough decline, with Sydney house prices slumping by 13 per cent, inching closer to the record 14.9 per cent drop racked up during the 2017 to 2019 downturn.
Brisbane tumbled by 10 per cent, almost as much as the record-breaking decline posted during the 2010 and 2012 downturn, when home values fell by 10.8 per cent.
Melbourne lost 8.6 per cent since the peak, slightly below the record decline of 11.1 per cent notched during the 2017 to 2019 downturn.
In dollar terms, Sydney home values have dropped by $150,758 on average from the peak, Melbourne by $70,243 and Brisbane by $78,381.
Adelaide posted a smaller peak-to-trough decline of 1.6 per cent or $10,395, while Perth fell by 0.7 per cent or $3897.
Holding value
Despite the sharp falls, Sydney dwelling values are still holding 9.1 per cent higher than before the onset of the pandemic after surging by 27.9 per cent during the boom.
House prices in Brisbane are still worth 28.4 per cent more than they were before the pandemic after the hefty 43.5 per cent jump in the past two years.
The small drop in Adelaide and Perth home values mean the pandemic gains of 45.3 per cent and 26.2 per cent respectively remained mostly intact.
By contrast, Melbourne’s smaller pandemic rise of 17.6 per cent and sharper decline mean values are just 1.4 per cent higher than two years ago and likely to fall below pandemic levels as prices drop further.
Nationwide, the 8.4 per cent drop follows an upswing of 28.9 per cent between September 2020 and May 2022, which was the fastest
rise in home values nationally on record, according to CoreLogic.
This means by the end of 2022, home values nationwide were still 16 per cent higher than they were five years ago, and 59.8 per cent higher than they were 10 years ago.