New data has revealed Australia’s ailing housing market has experienced its worst fall since the GFC more than a decade ago, with values falling in half of our capital cities.
According to the CoreLogic December home value index results, national dwelling values were down 2.3 per cent over the December quarter — the worst quarter on quarter result since December 2008.
The statistics showed Sydney and Melbourne were the hardest hit, followed by Perth and Darwin.
However, the other capital cities recorded an overall jump in values, although each city noted a weakened pace of growth compared with 2017.
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CoreLogic head of research Tim Lawless said national dwelling values were down 4.8 per cent, with an 8.9 per cent drop in Sydney and a 7 per cent fall in Melbourne.
“Although Australia’s two largest cities are the primary drivers for the weaker national reading, most regions around the country have reacted to tighter credit conditions by recording weaker housing market results relative to 2017,” he said.
“The two exceptions were regional Tasmania, where the pace of capital gains was higher relative to 2017 resulting in a nation leading 9.9 per cent gain in values over the 2018 calendar year, and Darwin, where the annual rate of decline improved from -8.9 per cent in 2017 to -1.5 per cent in 2018.”
Mr Lawless also told ABC News it was “the worst fall we’ve seen since the GFC, which was a short and sharp correction, down about 5 per cent from peak to trough”.
Mr Lawless said the market’s grim 2018 result proved the downturn reached beyond out two biggest cities.
At the end of the year, Sydney values were on par with what they were back in August 2016, compared with Melbourne at February 2017 levels.
The Sydney areas which have experienced the biggest drops of more than 10 per cent include Ryde, the Inner South West, Sutherland, Hills District and Hawkesbury, Parramatta and the Inner South, while Melbourne’s Inner East and Inner South had the worst declines.
In comparison, Perth values were in line with March 2009 while Darwin dwelling values are now at October 2007 levels.
Tim Lawless said while Melbourne and Sydney were driving the trend, most parts of Australia had also “reacted to tighter credit conditions by recording weaker housing markets relative to 2017”.
According to CoreLogic, Sydney’s median house price now sits at A$918,130 with a median apartment price of A$711,501, while the median Melbourne house is A$751,246 and the median unit is A$541,677.
In November, CoreLogic figures also showed median house prices in Sydney had fallen by A$72,041 in a year, while Melbourne had lost A$45,376 in the same period.
The alarming housing figures come just days after multinational investment bank and financial services company Deutsche Bank released a list of the biggest global risks which are expected to drive financial markets in the new year.
Compiled by chief international economist Torsten Slok, it includes a range of frightening factors, from political instability in countries such as India, Argentina, South Africa and Indonesia, the protests in France, the US-China and US-Europe trade wars, Brexit and the US government shutdown.
However, it also includes a potential “house price crash” in both Canada and Australia.
And don’t expect relief to come any time soon, with Mr Lawless expecting conditions to continue to weaken in the new year.
“With a federal election likely to be held sometime in May, we may see a further negative impact on confidence, especially amongst investors who will be impacted by changes to taxation policy should there be a change of government,” he said.
“On a positive note, interest rates are set to remain close to historic lows and migration is likely to remain high (albeit lower than last year) which will help to keep a floor under housing demand.”
- news.com.au
