Value of Residential Property: $7.5 trillion
Value of Australian Superannuation: $2.5 trillion
Value of Listed Equities: $1.9 trillion
Value of Commercial Real Estate: $0.972 trillion
Nationally, dwelling value growth has stopped in its tracks, in fact, over the first quarter of this year, national dwelling values have fallen by -0.5%. Although the quarterly rate of decline has slowed compared to recent months, it was the largest fall in values over a first quarter of the year since 2016. Over the 12 months to March 2018, dwelling values increased by 1.2% which was much lower than the 9.1% a year earlier and the slowest annual rate of growth since December 2012.
The slowdown in dwelling value growth is occurring in most capital cities, with Brisbane and Hobart the only two cities to have recorded value falls to-date. Sydney is leading the recent slowdown with values falling by -3.9% from their peak while Perth (-10.8%) and Darwin (-21.6%) have been in decline for a number of years, the falls in Melbourne (-0.7%), Adelaide (-0.4%) and Canberra (-0.2%) have been fairly minor to-date.
The decline in dwelling values across most capital cities is interesting. A fall in values in Sydney and Melbourne is somewhat understandable given surging values over recent years which have led to deteriorating housing affordability and record low rental yields. Furthermore, investors were a key driver of demand and increased regulation leading to higher interest rates have led to a slowing of demand from this segment. But outside of Sydney and Melbourne values have not really surged nor have investors comprised a larger than normal proportion of market activity.
The recent weakness is likely linked to overall housing market sentiment and tighter credit policies impacting on other capital city markets.
While capital city markets may be seeing weaker housing conditions, regional markets, particularly those in lifestyle areas close to capital cities are faring much better. Geelong is now experiencing a faster rate of annual growth than Melbourne. Annual growth in Illawarra, as well as Newcastle and Lake Macquarie is stronger than that of Sydney.
The Gold and Sunshine Coasts have recorded stronger annual value growth than Brisbane. It seems that many of those who have seen the value of their properties rise substantially in Sydney and Melbourne over recent years may be cashing out and moving to lifestyle markets where housing costs are much lower than those in these capital cities.
For more information and a copy of the full report visit CoreLogic.com.au.
