Cautious home buyers and stricter lending policies are responsible for a drop in housing prices across Australia, according to a leading property report.
Property consultant CoreLogic’s monthly figures revealed national property prices fell 0.3 per cent in December, setting the scene for a weaker housing market this year.
“Although credit policies are likely to remain tight, we expect mortgage rates to remain low in 2018, providing a positive lending environment for those who are able to secure credit,” CoreLogic’s head of research Tim Lawless said.
Sydney and Darwin were the weakest housing markets that month, slipping 0.9 per cent since November — while Hobart recorded the strongest growth in the country.
The nation’s biggest capital city also saw its prices fall by 2.4 per cent since in the last quarter.
“Despite the reversal in growth rates since August 2017, Sydney dwelling values remain 70.8 per cent higher than their cyclical low points in February 2012,” Mr Lawless said.
With a median price of $895,000, Sydney remains the nation’s most expensive market, and out of reach for many first-home buyers.
Mr Lawless believes Darwin’s housing downturn is “entrenched”, and has fallen by 21.5 per cent since May 2014.
But there is a silver lining for the Northern Territory capital.
“The substantial fall in values relative to rents has pushed Darwin rental yields to their highest level since July 2015,” Mr Lawless said.
Darwin’s rental yields are 5.9 per cent, making it the highest out of all capital cities.
Buyers look for affordability elsewhere
Melbourne performed somewhat better — thanks to stronger population growth, lower affordability hurdles and a higher rate of jobs growth.
Australia’s second biggest city fell 0.2 per cent — its first monthly decline since February 2016.
But its “growth trend has been clearly moderating since late 2016”, Mr Lawless said.
“Melbourne’s annual rate of capital gain, at 8.9 per cent, has fallen below double digits for the first time in 11 months.”
At the other extreme, Hobart was by far the strongest housing market for the month, quarter and year — rising by 1.5, 3.1 and 12.3 per cent respectively.
Its affordability, compared to other capital cities, was the main reason for capital appreciation in the Tasmanian capital’s housing market.
The median dwelling price in Hobart (including houses and apartments) was about $404,000 — compared to $895,000 in Sydney and $720,000 in Melbourne.
Over the past month, small gains were recorded in other capital cities — with Adelaide and Canberra gaining 0.2 per cent each.
Brisbane prices remained unchanged, and Perth prices fell by 0.1 per cent in December.
As for its property forecast, CoreLogic has warned prospective buyers to expect “softer housing market conditions through 2018, driven by a continuation of the slowdown that is clearly evidence across Sydney and to a less extent, Melbourne”.