Declines from property market peaks continue: Eliza Owen

Declines from property market peaks continue: Eliza Owen
Declines from property market peaks continue: Eliza Owen

GUEST OBSERVER

The national housing market has recorded a slight decline in median house and unit values over August 2016 according to the Residex median value index.

The falls in median values have been fairly broad-based across the country.

The August figures are detailed in Table 1 below (note that Residex median values are non-revisionary and are published monthly. The methodology used to calculate median values is different to Residex’s quarterly repeat sales index).

Click to enlarge

Table 1: August 2016 Median Value Index

 2016-09-20--market_update_residex

Source: Onthehouse.com.au

Across the nation, median house values fell by 0.86 percent in August and unit values declined by a very similar 0.87 percent.

While most regions have recorded a decline in median values in August, it is quite a different picture over the past 12 months.

Median house values have increased over the 12 months to August 2016 in most regions of the country and are 6.58 percent higher nationally. In comparison, seven of the 16 regions published in Table 1 have recorded a fall in median unit value over the past year. Nationally, median unit values have increased by 2.91% which is less than half the rate of growth of in house values.

When we look at the median house and median unit data over time, it shows that house and unit values are now below their peak in all regions. The magnitude of these declines varies significantly on a region-by-region basis as well as across different property types.

Graph 1 below highlights the magnitude of decline in median house values from the respective market peaks across the capital cities and nationally.

Graph 1: Change in median house values from their respective peak to August 2016 

Click to enlarge

Declines from property market peaks continue: Eliza Owen

Source: Onthehouse.com.au

Across the country, median house values are 0.9 percent lower than their previous peak. In terms of the greatest declines from peak, they have predictably occurred in the regions which have the greatest exposure to the resources sector. Regional Western Australia has been hardest hit with median house values 22.6 percent lower than they were at their peak. Perth, Darwin and Regional Northern Territory house values have also recorded substantially falls from their respective peaks, down 8.8 percent, 9.5 percent and 7.9 percent respectively.

In all other regions analysed, the decline since the market peak has been less than 5 percent.

Graph 2 following highlights the decline from the respective market peak to August 2016 for median unit values across the major regions of the country.

Graph 2: Change in median unit values from their respective peak to August 2016 

Click to enlarge

Declines from property market peaks continue: Eliza Owen

Source: Onthehouse.com.au

The results show a similar picture to what has unravelled for housing, with those regions linked closest to the resources sector having recorded the greatest value declines. At a national level, median unit values are currently 0.9% lower than their peak which is an equivalent decline to that recorded for houses. The regions with the largest overall declines in median unit values have been: Regional Western Australia (15.1 percent), Regional Northern Territory (14.1 percent), Darwin (13.7 percent), Perth (11.3 percent) and Regional South Australia (8.4 percent).

Across most regions of the country median house values have recorded more moderate overall declines than units however, there have been a handful of exceptions. In Sydney, Melbourne, Brisbane and Regional Western Australia, the overall decline in median house values have been greater than median unit value declines.

Eliza Owen is the market analyst for Onthehouse.com.au. She can be contacted here.

Eliza Owen

Eliza Owen

Property market analyst. I hold a first class honours degree in economics from the University of Sydney. I have been a regular economic commentator on FBI Radio, and have been a guest speaker on Triple J’s Hack, 702 ABC Radio, Sky News and at TEDxYouth Sydney. I have provided comment for various media outlets including The Guardian Australia, the Australian Financial Review, Pedestrian TV, the Daily Telegraph and more.

Tags: 
Housing Affordability Housing Market

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