At a national level, since 1980 there have been eight separate housing market downturns, and only two have been larger than the current one, according to CoreLogic.
The current downturn which commenced after October 2017 has seen values fall by 6.8 per cent, the latest CoreLogic Property Pulse has found.
“Although that may not seem like a substantial downturn, since the early ’80s, there have only been two downturns which were larger, 2008–09 and 1982–83,” said CoreLogic head of research Cameron Kusher.
“National housing market downturns have also been generally fairly short-lived, with the current downturn of 16 months already the second longest with the 2010–12 decline running two months longer than the current downturn.”
He said that most of the loss has been felt in the main cities.
“The decline in values throughout the current downturn has been larger across the combined capital cities, with values now 8.6 per cent lower.
“By next month, assuming the falls continue, this will be the largest downturn in the combined capital city index any time since 1980.”
Mr Kusher said the current downturn is also closing in on being the longest.
“With values having peaked in September 2017, they have now been falling for 17 months, with the previous longest period of decline coinciding with the last recession, running for 20 months between 1989 and 1991.”
He said this, of course, raises other questions.
“With values now falling across most capital cities the question, of course, becomes when do the falls stop,” Mr Kusher said.
“No one really knows the answer to that question, our models show, at least for the short term, that values are likely to continue trending lower, with the rate of decline easing later this year and into 2020.”
Mr Kusher said the other question is once markets reach a trough, how quickly will they recover?
“Historically, market recoveries from their trough have generally been fairly rapid; however, the recoveries have generally been driven by lower interest rates or a mix of stimulus such as the first home buyers grant boost.
“Although there is an expectation that interest rates may move lower, we probably won’t see the entire rates cuts passed through to mortgage rates, and the much tighter credit conditions are likely to limit any rebound in the housing market, particularly given borrowers are being assessed on their ability to repay a mortgage at a much higher rate, above 7 per cent.”