Pace of property price falls eases as Sydney housing slide exceeds 10pc for first time since 1980s

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Pace of property price falls eases as Sydney housing slide exceeds 10pc for first time since 1980s

Housing prices around the country fell again in February with Sydney’s annual decline breaking through the 10 per cent barrier for the first time since the early 1980s and Melbourne not far behind, according to researcher CoreLogic.

However, the pace of the price falls are easing though the softening market is spreading across the country as tight lending conditions and nervous consumers weigh on the market.

Six of the eight capital cities recorded falling monthly values, CoreLogic’s February home value index showed.

Only Hobart chalked up rising values at 0.8 per cent for the month while Adelaide was flat.

In Sydney, housing values fell 1 per cent for the month taking the fall for past year to 10.4 per cent. Melbourne’s home prices were also down 1 per cent and 9.1 per cent for the year.

Brisbane’s previously resilient market saw prices fall 0.3 per cent for the month to drag the annual change into the red at 0.5 per cent, while Perth’s brief housing rebound ended with the city booking a 1.5 per cent drop for the month and 6.9 per cent fall for the year.

Although home values have been falling for almost a year and half — down 6.3 per cent around the county in the past 12 months — nationally dwelling values remain 18 per cent higher than they were five years ago with most homeowners remaining in a strong equity position, CoreLogic said.

“The fact that we are seeing weakening housing market conditions across regions where home values were previously rising at a sustainable pace and economic conditions are relatively healthy is a sign that tighter credit conditions are having a broad dampening effect on buyer activity,” Mr Lawless said.

Meanwhile the market is grinding to a halt with national settled sales down 12.8 per cent year-on-year, with steeper falls in settled sales in Sydney (-20.6 per cent) and Melbourne (-22.1 per cent).

Regional housing market values were holding firmer than the capital cities, with dwelling values down 1.4 per cent over the past twelve months compared with a 7.6 per cent fall in capital city home values.

The weakest areas were in the top half of the Sydney and Melbourne markets.

“Many of these regions saw larger capital gains during the upswing but also typically show higher ratios of dwelling values relative to household incomes, implying affordability is stretched in these markets,” Mr Lawless said.

Sydney’s inner west (down 10.8 per cent for the year), south west (down 10.8 per cent), Parramatta (down 11 per cent), and inner south west (down 13.4 per cent) were hardest hit in terms of price falls. In Melbourne, the outer east (down 11.2 per cent), inner south (down 12.4 per cent) and inner east (down 15.1 per cent) felt the pain.

Overall, Mr Lawless blamed tighter credit as the main driver of the downturn expecting that this environment was the “new normal”. Concerns of apartment oversupply and the lack of foreign buyers were also depressing the market, he said.

TURI CONDON
PROPERTY EDITOR
Turi Condon is The Australian's Property Editor. In 2003 Turi launched The Australian's commercial property section, Primespace, and has written widely across the newspaper on commercial and residential propert... Read more

 

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