Sydney property prices down 4.2 percent in first annual national decline since 2012: CoreLogic

Sydney property prices down 4.2 percent in first annual national decline since 2012: CoreLogic
Sydney property prices down 4.2 percent in first annual national decline since 2012: CoreLogic

Australian dwelling values slipped 0.1% lower in May, taking the annual change (-0.4%) into negative territory for the first time since October 2012, according to CoreLogic.

In a sign the housing market downturn is becoming more entrenched, May marked the eighth consecutive month-on-month fall since the national market peaked in September last year, taking the cumulative fall in dwelling values to 1.1% through to the end of May 2018.

Similar to the current softening in housing market conditions, the previous downturn, which ran briefly from late 2015 to early 2016, was also driven by tighter credit conditions.

It lasted for only five months nationally, with national dwelling values falling by 97 basis points before surging higher again on the back of two 25 basis point cuts to the cash rate which led to a rebound in housing credit growth.

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Sydney property prices down 4.2 percent in first annual national decline since 2012: CoreLogic

 

CoreLogic head of research Tim Lawless said Sydney and Melbourne performance has a big effect on the nation's figures.

“The negative headline growth rate is a symptom of weakening housing conditions across the capital cities, led by Melbourne and Sydney where previously, capital gains were nation-leading," Lawless said.

"Sydney and Melbourne comprise approximately 60% of Australia’s housing market by value, and 40% by number, so the performance of these two cities has a larger effect on the headline market performance.

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Sydney property prices down 4.2 percent in first annual national decline since 2012: CoreLogic

Melbourne has taken over from Sydney as the weakest performing housing market over the past three months Drilling down across the individual capitals shows Melbourne has taken over from Sydney as the weakest housing market, recording a 0.5% fall in values over the month to be 1.2% lower over the three months ending May.

This is the largest decline in Melbourne dwelling values over a three month period since February 2012. Melbourne’s housing market was previously looking more resilient to value falls relative to Sydney. Recently however, auction clearance rates have been deteriorating, inventory levels are rising and transaction activity is tracking 12.9% lower than one year ago.

Dwelling values slipped lower over the month across five of Australia’s eight capital cities. Apart from Melbourne, dwelling values recorded a month-on-month fall in Sydney (- 0.2%), Perth (-0.1%), Darwin (-0.2%) and Canberra (-0.1%), however, Sydney was the only capital city other than Melbourne to record a decline in dwelling values over the past three months, with a 0.9% fall.

Hobart’s impressive run of capital gains continued and is showing little signs of slowing down with dwelling values jumping 0.8% over the month to be 3.7% higher over the rolling quarter and 12.7% higher year-on-year.

Perth and Darwin showing signs of levelling. In Perth and Darwin where dwelling values have been trending lower since 2014, both cities recorded a subtle fall in values over the month, however, in a further sign that conditions are levelling out, dwelling values were up over the past three months across both cities. The annual rate of decline across Perth, at -1.2%, was the smallest annual fall in two years.

The more expensive end of the housing market was the primary driver for weaker conditions. Nationally, the only value-based segment of the housing market to record an annual decline has been the most expensive quarter of the market where values were down 1.3% over the past twelve months. Simultaneously, the most affordable quarter of the market saw values rise by 1.0% and the broad middle of the market recorded a 2.3% rise in dwelling values over the year.

At a national level, the weakness across the most expensive properties is heavily influenced by the Sydney and Melbourne markets where dwelling values are higher than other cities.

In Sydney, the most expensive quarter of the market has seen dwelling values fall by 7.1% since peaking compared with a 1.4% fall across the least expensive quarter of the market and a 3.3% decline across the broad ‘middle’ of the market. Similarly, in Melbourne, the most expensive quarter of the market is down 3.3% since peaking, while the broader middle market saw dwelling values fall by 0.8%. The most affordable quarter of properties did not decline at all, remaining at record high values. The resilience across the most affordable quarter of the market in Sydney and Melbourne is likely attributable to the higher proportion of first home buyers, which, since the middle of 2017, appear to be propping up demand across the lower price points.

 

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Price Decline Corelogic

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