CoreLogic’s January home value index shows the property market in Melbourne and Sydney continued to fall, with all capital cities apart from Canberra recording a month-on-month fall in dwelling values.
CoreLogic’s hedonic home value index shows a further 1.0 per cent decline in national dwelling values over the first month of 2019, taking the cumulative decline in Australian dwelling values to 6.1 per cent since the market peaked in October 2017.
The national index has fallen over 13 of the past 15 months and national dwelling values are now back to levels last seen in October 2016.
CoreLogic head of research Tim Lawless said that, while January can be a tough month to read the housing market, the pace of decline has been increasing over the last three months – likewise with the moderation of growth elsewhere.
“Tight credit conditions, weakening consumer sentiment, less domestic and foreign investment and higher levels of housing supply are the primary drivers of the worsening conditions,” said Mr Lawless.
“Buyers are now in a position where they can negotiate harder, take their time in making a purchase decision and be selective in finding a home that is right for their budget and lifestyle.
“On the other hand, vendors are clearly facing more challenging selling conditions.”
The declines in January continue the property market’s trajectory over 2018, which saw some of the weakest conditions since the GFC.
Sydney and Melbourne were down 1.3 per cent and 1.6 per cent respectively over the month, bringing the quarterly falls to 4.5 per cent and 4 per cent and annual falls to 9.7 per cent and 8.3 per cent.
The cities are now 12.3 per cent and 8.7 per cent down from their peaks in July and November 2017.
The biggest numbers were seen in Australia’s two largest cities, but across most of the capitals declines could be seen. Every capital, apart from Canberra, recorded a month-on-month fall in dwelling values and only two capital cities (Hobart and Canberra) recorded a rise in values over the past three months.
In the places which saw rising figures the speed of the rise has begun to decrease, showing a loss of steam across the country. The only regions where the annual change in dwelling values has improved are Darwin, where the annual rate of decline has eased from -9.7 per cent a year ago to -3.5 per cent, regional Tasmania where the annual rate of growth has risen from 4.9 per cent a year ago to 9.2 per cent, and regional NT where the annual decline of -1.0 per cent has improved to an increase of 1.1 per cent.
However, unlike previous market downturns, Australia’s economy is relatively strong currently, which means the figures in the property market aren’t as dire as could be interpreted. With strong job growth and low rates, which could drop further over the next 12 months, experts say there’s no need to panic.
While CoreLogic is currently predicting declines in Sydney and Melbourne of 18-20 per cent, that comes after prices rose nearly 80 per cent and 60 per cent respectively, and with homeowners still in secure employment and able to pay their mortgage it seems unlikely the downturn will be felt as strongly as others have in the past.
“There are numerous factors impacting the housing market at the moment, including a credit squeeze
created by restrictive lending practices, but the overwhelming impact on house prices over the past year
has been the record volume of new home building,” said HIA principal economist Tim Reardon.
“Housing affordability is about ‘Supply and Demand’ and for most of this century there have been
constraints on new home building that have limited supply and forced up prices. These constraints on
new home building are why Sydney experienced 19 per cent house price growth in a single year and 82 per cent in six years to the end of 2017,” said Mr Reardon.
He went on to say the boost in new homes will also benefit renters, with rental price inflation stalling as the needs of the market are met.