CoreLogic released its February home value index results showing a a fall of 0.7%, across the combined capitals increasing the cumulative decline to -6.8% since values last peaked in October 2017.
Head of research at CoreLogic, Tim Lawless said, “The fact that we are seeing weakening housing market conditions across regions where home values were previously rising at a sustainable pace and economic conditions are relatively healthy is a sign that tighter credit conditions are having a broad dampening effect on buyer activity.”
Mr Lawless also stated that the national rate of decline has eased slightly relative from January and December.
On an annual basis
Only three of Australia’s eight capitals have recorded a rise in values over the past twelve months, led by Hobart where values were up 7.2%. Brisbane (-0.5%).
This shows a negative annual change for the first time since 2012 and Sydney’s housing market moved into double digit annual declines for the first time since the early 1980s.
Mr Lawless said, “If Melbourne’s downturn continues at a similar pace we are likely to see the annual decline move into double digit falls over the coming months as well, with values currently 9.1% lower over the year.”
Regional versus capital
Regional housing market values are generally holding firmer than capital city markets, with dwelling values down 1.4% over the past twelve months compared with a 7.6% fall in capital city dwelling values.
The top-performing regional areas continue to be centred around regional Tasmania and the larger cities/towns surrounding Melbourne
Across the capital city sub-regions, the strongest housing market conditions are confined to the Hobart, Canberra, Adelaide and Brisbane markets.
Overall, Mr Lawless said, “The February housing market results marked a subtle improvement in the rate of decline. However, the housing market downturn is now more widespread geographically and we aren’t seeing any indicators pointing to the market bottoming out just yet.”
While credit availability seems to be the key driver of the slowing conditions. Mr Lawless cites other factors are contributing to the downturn in housing market conditions.
With new housing supply now weighing on some markets. Concerns around oversupply are generally confined to specific high-density precincts, and to a lesser extent, some greenfield detached housing markets.
A build-up of stock available for sale
The number of properties advertised for sale has been consistently rising due to fewer buyers and longer selling times.
Despite the surge in inventory, ‘fresh’ stock being added to the market was down 19% relative to last year, highlighting that vendor confidence is low.
Buyers are firmly in the driver’s seat and in a good position to take advantage of the strong buying position.
The Westpac/Melbourne Institute survey of consumer sentiment has consistently highlighted a pessimistic view from consumers around their expectations for house prices. Which is likely to be another factor reducing market demand.
The latest Residential Property Survey from NAB showed foreign buyers comprised just 6.5% of new housing demand, down from almost 17% in late 2014.
The reduction in foreign buying activity is likely to have a greater impact within the high-rise apartment sector where activity was previously most concentrated.