Weakest property market since 2008: Sydney, Melbourne house prices tumble
Sydney and Melbourne were the worst performing real estate markets in the country last year with house prices falls of 10 per cent and 9 per cent respectively, but economists warn there are more declines to come.
The two largest capital cities in the country have dragged down national dwelling values 4.8 per cent over the year in the worst national result since the December quarter of 2008, data from housing research firm CoreLogic shows.
The latest data from CoreLogic reveal the largest quarter on quarter decline since the December quarter of 2008.
Sydney’s dwelling prices have fallen back to the same level in August 2016, before the peak of the real estate boom, while Melbourne’s prices are now at February 2017 levels.
Some commentators, such as AMP Capital chief economist Shane Oliver, have warned further falls of up to 10 per cent in property prices are expected in 2019.
Housing research firm SQM Research managing director Louis Christopher also expects substantial declines of 6 to 9 per cent in Sydney and Melbourne this year, in part due to an upcoming Federal Election with Labor proposing changes to investor tax break scheme negative gearing.
“There’s a lot of uncertainty in an election year. Investors are holding back as they don’t know how it will play out [if negative gearing is changed],” Mr Christopher said.
He said banks were taking a “very archaic and dim view of everyone’s expenses” when providing borrowers with home loans, further weighing on the property market.
“We’ve been in a downturn since the second half of 2017, I would say it’s getting beyond temporary now – this is a medium-term downturn. Prices will fall again.”
In 2018, the worst performing areas of Sydney were Ryde, the Inner South West, Sutherland, Hills District and Hawkesbury, Parramatta and the Inner South, all with falls of more than 10 per cent.
Melbourne’s Inner East had a 13.4 per cent drop, making its the worst performing city region over the year nationally, while the Inner South declined 10.5 per cent.
Apartment prices dropped 8.9 per cent in the last 12 months in Sydney and 7 per cent in Melbourne.
CoreLogic head of research Tim Lawless said in a statement that Melbourne and Sydney were the primary reasons for the lower national result though most regions across Australia had “reacted to tighter credit conditions by recording weaker housing markets relative to 2017”.
Sydney dwelling values, which combines units and houses, are now 11.1 per cent lower than their peak in July 2017, with Melbourne values down 7.2 per cent since the market peaked in November 2017.
CoreLogic records Sydney’s median house price at $918,130 and apartment price at $711,501, with Melbourne houses at $751,246 and units at $541,677.
The worst affected parts of the markets have been higher priced locations, with the top priced quarter of Sydney and Melbourne’s property markets down 11.2 per cent and 10 per cent respectively. The lowest price quarter of the market in Melbourne increased 0.5 per cent in price, while Sydney’s cheapest real estate fell 6.8 per cent.
The weakest capital city for unit prices was Darwin where values fell 10.4 per cent though overall the Northern Territory’s capital has seen property prices improving after years of declines.Weakest property market since 2008_ Sydney, Melbourne house prices tumble
The housing market was weak in Perth, where median prices fell 4.3 per cent. Every other capital city’s house prices increased, though at slower rates than in the past. Darwin dwelling values are now comparable to October 2007, while in Perth prices are at March 2009 levels.
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