Australia's housing values continue to decline

MELBOURNE: With rising stock, tight credit and signs of rising mortgage rates, Australia’s housing market looks challenging as national housing values continue to dip for the eleventh consecutive month in August.

According to property data and analytics provider CoreLogic, since peaking in September last year, dwelling values have been tracking lower, down a cumulative 2.2% through to end-August. The CoreLogic National Home Value Index tracked 0.3% lower over the month of August.

“Weaker housing market conditions can be tied back to a variety of factors, foremost of which is the tighter credit environment which has slowed market activity, especially amongst investors. Fewer active buyers have led to higher inventory levels and reduced competition in the market. Collectively, these factors have been compounded by affordability challenges, reduced foreign investment and a rise in housing supply,” said CoreLogic head of research Tim Lawless.

Of the eight capital cities, only Adelaide (0.3%), Darwin (0.1%) and Canberra (0.5%) saw dwelling values rise in August.

A three-month trend shows Melbourne as the weakest capital city housing market with dwelling values falling 2% over the three months ending August; the weakest rolling quarterly result since the three months ending January 2012.

Perth, which had positive movement earlier in the year, saw values down 1.9% over the past three months. Adelaide takes over from Hobart as the top performer over the three months to the end of August. The South Australian capital city’s dwelling values were half a per cent higher over the past three months, with quarterly gains also recorded in Canberra (+0.4%) as well as Hobart and Brisbane, both up +0.1%.

According to CoreLogic, the weakest housing markets were Sydney and Melbourne where dwelling values were previously rising the fastest but have now fallen 3.5% and 3.3% respectively, over the first eight months of the year.

“Considering the sheer size of the cities; Sydney and Melbourne comprise approximately 60% of Australia’s housing market by value, and 40% by number, the weaker performance in these cities has a significant drag down effect on the combined capitals and national reading of the market,” according to the data provider.

The regional markets have also continued to weaken, according to the data, with values slipping lower for the second consecutive month across the combined rest of the state index to be down 0.2% over the month and 0.6% lower over the rolling quarter.

“Regional areas of the mining states continue to deliver the most significant drag on the headline growth rates, with values down 3.5% over the past three months across regional Western Australia and 1% lower across regional Queensland,” said Lawless.

This story first appeared in the EdgeProp.my pullout on Sept 7, 2018. You can access back issues here.