Volatile housing markets perplex homebuyers
Australia’s two-speed housing market continues to perplex first home buyers and investors alike by causing ongoing fluctuations in an already unsettled market.
Recent data released by industry experts CoreLogic week denotes that house prices fell in May across the board.
Although there is huge variation in prices from state to state and capital city to capital city, downward pricing falls have been recorded in both Sydney and Melbourne, while other capital cities have remained steady – except for Hobart, which is on the up.
Prices are still rising sharply in Tasmania’s capital city, and this is being put down to a strong local economy, a low vacancy rate for rentals and higher yields across the board.
The CoreLogic data states that while house prices in Sydney and Melbourne doubled between January 2009 and August 2017, house prices in Brisbane fell by almost 10 per cent, until starting a mild upturn in 2013 and then coming good around 2015.
So, over the same eight-year period, Brisbane house prices rose by 16.2 per cent, while Sydney house prices rose a staggering 113.2 per cent.
The data seems to indicate that markets outside of Sydney and Melbourne, although they may not have added as much value, have also not lost as much value as the more buoyant capital city markets.
CoreLogic’s Data Research Director Tim Lawless says nationally Australian dwelling values slipped 0.1 per cent lower in May 2018.
“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 per cent through to the end of May 2018,” Tim explains.
“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.”
Elsewhere in Australia, Adelaide’s annual house prices rose by 0.6 per cent annually, making the median price $437,234 while in Perth they slipped by 1.8 per cent annually, making the median house price in WA’s sunny capital $463,319.
In Darwin annual prices were down by 7.9 per cent, making the average house price there $434,134, and in Canberra they rose slightly by 2.3 per cent to $592,954.
Melbourne takes the mantle… as the weakest performer
CoreLogic said the negative growth rate overall is a symptom of weakening house price conditions across the capital cities – which is being led by Melbourne and Sydney.
“Sydney and Melbourne comprise approximately 60 per cent of Australia’s housing market by value, and 40 per cent by number, so the performance of these two cities has a larger effect on the headline market performance,” says Tim.
“The combined regional markets have helped to offset a broader decline, with dwelling values consistently rising, albeit at a much lower pace relative to the growth seen in Sydney and Melbourne over the previous growth phase. Dwelling values outside of the capital cities nudged 0.2 per cent higher over the month to reach a new record high in May.”
It seems that as far as Melbourne and Sydney go, Melbourne has taken over as the weakest performing market in the past three months.
Melbourne recorded a 0.5 per cent fall in values over the month to be 1.2 per cent lower over the three months ending May. This is the largest decline in Melbourne dwelling values over a three-month period since February 2012.
Sydney’s auction market has also slumped to its lowest level since 2012, with buyers jumping at the chance to grab themselves a bargain.
According to Business Insider Australia: “Many analysts believe weakness in Sydney and Melbourne clearance rates, along with softness in other housing indicators such as lending finance, housing credit growth and foreign investment approvals, point to the likelihood that prices will remain under pressure for some time yet.”
And as auction clearance rates continue to fall it seems to be a firm indicator that prices will indeed continue to weaken in the months ahead in 2018.
Watch this space…