House prices falling as Sydney drops below $1 million median: Domain
Sydney’s median house price fell below $1 million, declining like most Australian capital cities except Melbourne and Hobart, as the real estate sector feels the pinch of a weakening economy, says the March Quarter Domain House Price Report.
Unit prices also fell across the board following a record number of apartments being built in most capitals over recent years.
The national median has now fallen over two consecutive quarters for the first time since June 2011.
Commenting on the report, Domain's chief economist, Dr Andrew Wilson, said:
“Weakening economic activity and growing uncertainty is impacting fragile consumer and investment sentiment, leading to falling house and unit prices in most capital cities.
The outlook for house prices is not bright either with capital city growth likely to track at best just above the inflation rate for the remainder of 2016, he added. However, weaker house price growth could be a boon for prospective first home buyers.
Sydney
Sydney’s median house price fell again over the March quarter, recording a 1.5 per cent drop down to $995,804. This followed the record decline over the previous December quarter.
The $1 million median was touched in the June quarter of 2015, 326 days earlier than expected, with Domain's Dr Wilson calculating it to be $1,000,616 then.
Sydney’s unit prices also fell for the second consecutive quarter, down by 0.7 per cent to $656,166.
Despite both experiencing declines over the March quarter, Sydney house prices increased by 6.9 per cent over the year while unit prices rose by 5.8 per cent.
“The Sydney market’s rate of decline slowed after the dramatic drop recorded in the previous quarter, experiencing a consecutive quarterly price decline for the first time since December 2011. We can expect subdued conditions to continue over the remainder of the year, with any price growth unlikely before spring,” said Wilson.
Melbourne was the only mainland capital to buck the trend of falling house prices, recording an increase of 1.2 per cent over the March quarter, reaching a median of $726,962. Melbourne house prices increased by 11.8 per cent over the year ending March — the strongest result of all the capitals.
Melbourne unit prices fell by 1.7 per cent over the March quarter to $444,370 for an annual increase of 3.8 per cent.
“Melbourne has now overtaken Sydney as the fastest growing capital city housing market in Australia. Melbourne has recorded 14 consecutive quarters of house price growth, the longest sequence since June 2008,” said Wilson.
Brisbane house prices fell marginally over the March quarter for the first decrease since the September quarter 2014, with a median price of $512,809. Brisbane unit prices were also down over the quarter, falling by 0.8 per cent to $367,058.
Across the year, Brisbane house prices increased by 4.1 per cent with unit prices falling by 3.2 per cent.
“Brisbane has now recorded seven consecutive quarters of falling unit prices with the recent apartment building boom having pushed supply ahead of demand. The local house market has also failed to build on a solid finish to 2015, with the median house price falling to $512,809,” said Wilson.
Adelaide
The Adelaide housing market reversed its consistent growth performance of last year with the median house price falling by 0.5 per cent to $491,422. The March quarter decrease followed the strong result recorded over the previous December quarter and was the sharpest decline since September 2012.
Adelaide unit prices were steady over the March quarter with a median of $303,537, making Adelaide the only capital not to experience a decline this quarter. Unit prices increased by 2.2 per cent over the year with house prices up by 3.4 per cent.
“A consolidating result for Adelaide after a strong finish last year. Similar to other capitals, Adelaide has experienced a flattening of price growth with future growth likely at a slower rate than recent years,” said Wilson.
Perth
The revival of Perth’s house prices was short-lived with the median falling by 1.3 per cent over the March quarter to $579,914. The weaker result followed an increase over the previous December quarter, which was the first rise in a year. Perth house prices fell by 4.7 per cent over the year ending the March quarter, which was the strongest decline of all the capitals.
Perth unit prices also fell over the March quarter following the increase recorded over the previous December quarter. Unit prices decreased by 3.7 percent to $379,975 and have fallen by 5.1 percent over the past year – the sharpest annual decline since December 2011.
“Although Perth house prices increased marginally over the previous quarter following a year of falls, the median again fell in the March quarter and it will be a slow journey back to price growth,” said Wilson.
Hobart
Hobart house prices continue to rise strongly with the median increasing by 4.3 percent over the March quarter to $360,212. The March result follows the 3.5 percent increase recorded over the previous December quarter with annual prices now up by 7.6 percent – the second best performance of all the capitals.
Hobart unit prices fell sharply by 6.2 percent over the March quarter to $251,633 for a fall of 3.3 percent over the year.
“After a lengthy period of subdued growth, Hobart continues to play catch up, recording the strongest price increase of all capitals across the March quarter. Despite further likely rises, Hobart remains the most affordable Australian capital city,” said Wilson.
Canberra
Canberra house prices fell over the March quarter following five consecutive quarters of growth. The median house price decreased by 1.4 percent to $638,696 over the quarter but has increased by 4.8 percent over the past year.
Canberra unit prices reversed the rise of the previous quarter, falling by 2.8 percent to $400,637 for an annual decrease of 4.7 percent.
“An oversupply of new apartments is affecting unit prices in Canberra. A rebound in Canberra house prices will be dependant on the performance of the local economy with all eyes as usual on the upcoming federal budget,” said Wilson.
Darwin
Darwin house prices fell sharply over the March quarter, down by 4.9 percent to $610,305 and the third consecutive quarter of falling house prices. Unit prices were also down over the quarter, decreasing by 4.1 percent to $448,416.
Darwin house prices have declined by 3.3 percent over the past year with unit prices down by 8.3 percent - the weakest performance of all the capitals.
“The Darwin market continues to adjust to the downturn of the mining sector and reduced demand from fly-in-fly-outs. Lower prices, however, are good news for homebuyers. The Darwin unit market remains vulnerable to further price falls as a result of a recent spike in the the development of new apartment complexes,” said Wilson.