CoreLogic has released their Best of the Best report for 2018, revealing the suburbs which performed best as the property market slowed.
At a macro level, CoreLogic research analyst Cameron Kusher describes the property market conditions for 2018 as ‘slowing quite rapidly’. Digging beneath the surface, his analysis found that the market conditions are now somewhat of a mixed bag, and as diverse as ever.
Values fell nationally by -4.1 per cent over the 12 months to November 2018, which marks the largest annual fall since December 2011. CoreLogic reports values declining more rapidly, particularly in Sydney and Melbourne, as the year progressed.
Across the capital cities, dwelling values fell over the past year in Sydney, Melbourne, Perth and Darwin while they rose everywhere else.
Across the individual capital cities, the annual change in values were recorded at: -8.1 per cent in Sydney (its largest annual fall since May 1983), -5.8 per cent in Melbourne (its largest annual fall since March 2009). +0.3 per cent in Brisbane, +1.4 per cent in Adelaide, -4.2 per cent in Perth, +9.3 per cent in Hobart, -0.8 per cent in Darwin and +4.0 per cent in Canberra.
Inside this slowdown, there were still some suburbs which performed well. Tasmania and NSW dominated the list in residential, with both taking out four spots in the top ten. In units, it was NSW again, joined this time by Victoria, with both holding three spots in the top ten.
These suburbs show that the property market is still as complex as it has ever been when you dig below the surface, despite national figures showing a slowdown and modest growth.
Particularly interesting is the driving factors in the slowdown, with Mr Kusher saying that unlike previous housing market cooldowns, it wasn’t economic slowing to blame, instead the chance in 2018 was manufactured by tighter credit conditions while the economy continues to grow and mortgage rates sit at near record low levels.
“Since the onset of financial deregulation in the mid-1980s, credit access at the time became a whole lot easier for borrowers. However, since macroprudential policies implementation began in 2015, accessing credit has become incrementally more difficult and where investors and interest-only borrowers are having to pay higher mortgage rates.”
2019 will bring more of the same says Mr Kusher, with Sydney and Melbourne, expected to drive the decline while other regions even out or experience a slight slowing in growth.
“2019 credit conditions are expected to remain tight – a likely catalyst towards dampening housing market conditions. February will see the release of the Banking Royal Commission findings and recommendations and will potentially deliver significant changes for the mortgage landscape.”
“To-date the Reserve Bank has not been overly concerned with falling dwelling values largely because it has mostly been contained to Sydney and Melbourne and both cities have seen a substantial run-up in values over recent years. While that may be the case, if the slowing housing market delivers an impact consumer consumption, we could then see a change of tact. Were this to happen, we could see some of the temporary macroprudential measures eased back throughout 2019.”
