02 Oct PROPERTY MARKET UPDATE SEPTEMBER 2018
Nationally hose prices dropped again, recording their 12th monthly decrease according to the latest CoreLogic Hedonic Home Value Index.
September saw Brisbane, Hobart and Canberra record slight increases, but drops of 0.9% in Melbourne, 0.6% in Sydney and Perth assisted in an overall drop of 0.5%. The drop rounds off an annual fall of 6.1% in Melbourne and a 3.4% decrease in Sydney. Not all the capital cities have been in freefall Hobart has seen prices rise by 14.7% over the last 12 months but that has been tempered in the last month with a smaller increase in the last month of 0.4%. Canberra has also risen being the best performing capital this quarter with 1.0% growth and annually increasing by 6.6%.
Locally the Perth market rate of decline, even though recording a 0.6% decrease the annual rate of decline has eased off (-2.4% in March).
Source: CoreLogic September Home Value Index. Index Results at September 30
CoreLogic head of research Tim Lawless said, “While the housing market downturn is well entrenched across Darwin and Perth where dwelling values remain 22.1% and 13.2% lower relative to their 2014 peak, Sydney and Melbourne are now the primary drag on the national housing market performance.
“We’ve seen Sydney dwelling values drop 6.1% over the past twelve months and Melbourne values are 3.4% lower. Not only are these amongst the largest annual falls across the capital cities, but considering Sydney and Melbourne comprise approximately 60% of the national value of housing, the weak conditions in these cities have a substantial drag down effect on the overall national housing market performance.”
The rental market yields continues to improve as values trend lower and rental rates increase. The highest yield can be found in Darwin and Hobart.
Future Drivers and challenges
The report highlights a number of areas that may impact the market. Mr Lawless notes that the housing market has slowed virtually in line with heightened levels of regulation across the finance sector and subsequently, tighter lending practices and a sharp reduction in investment. He said, “With the release of the banking commission interim report, there is a chance that already tight credit conditions could tighten even further.” “The constant theme from the report is that regulators should monitor and enforce existing policy much better, while lenders and brokers need to place client interests ahead of profits. This implies a more conservative lending approach going forward which is likely to impact further on credit availability.”
A potential change of government at the next federal election could also be impacting potential investors, should changes to taxation policy be put in place along with increased mortgage rates for investors and weaker capital growth prospects dampening the appetite.
Another factor is the slowing of population growth with migration down 9% for the year to March. The only state to benefit currently is Queensland where there is a growth of population from other states.
With good economic conditions, labour markets have strengthened with unemployment at it’s lowest level since 2014, we may see an increase in salaries that could drive improvements into housing affordability and decrease in household debt.
To read the full report: https://www.corelogic.com.au/septemberhomevalueindexresults