Falling home prices in Sydney, driven by rising demand for units over freestanding houses, have played a big part in a slowdown in property markets around Australia’s biggest cities, a new report shows.
Sydney home prices have fallen 2.1 per cent in the past year and were down 1.7 per cent in the three months to March, Corelogic’s latest Home Value Index report shows.
The diminishing value of homes in Sydney reflects an increase in demand for units and apartments, Corelogic head of research Tim Lawless said, particularly among first home buyers.
“The softening trend in Australia’s broader housing market is largely due to weaker conditions in Sydney, however most other capitals are also recording subtle falls ,” Mr Lawless said.
Over the past 12 months, growth in the value of units in Melbourne outstripped the value of detached housing, while in Sydney unit prices grew and detached housing prices retreated.
“Buyer demand is becoming more concentrated in the medium to high-density sector where entry prices are lower and commuting is easier,” Mr Lawless said.
A surge in NSW first home buyer activity following favourable changes to stamp duty rules may also be supporting the Sydney apartment market, Mr Lawless said.
Over the first three months of 2018, six out of Australia’s eight capital cities showed declining house values, with only Hobart recording a gain.
But while capital city values are still trending lower, Corelogic says the pace of decline is starting to ease, particularly in Sydney where falls have been most dramatic.
Strength in regional markets, particularly major centres such as Geelong, Newcastle and the ACT, have offset the weakness apparent in the nation’s capitals.
Australia’s strongest performing regional market is Tasmania and Hobart is Australia’s strongest performing capital city.
Hobart prices have jumped 13 per cent in a year while dwelling values outside Hobart are 5.4 per cent higher thanks to interstate migration attracted by the region’s lower cost of living.