House prices stabilising in Australian cities, latest index shows

House prices falls in key cities in Australia have stabilised but values are down considerably compared to where they were a year ago, the latest national index data shows.

Five of the eight capital cities covered by the CoreLogic index record a price rise month on month with Sydney, Melbourne and Brisbane all up 0.2% in July compared with June and Hobart up 0.3% and Darwin up 0.4%.

But prices fell month on month by 0.5% in Perth and fell by 0.3% in Adelaide and Canberra, the figures from the index also show.

Compared with July 2018 prices are down by 9% in Sydney, by 8.9% in Perth, by 8.7% in Darwin, by 8.2% in Melbourne, by 2.4% in Brisbane and by 0.8% in Adelaide. But year on year they are up 2.8% in Hobart and 1.1% in Canberra.

Tim Lawless, head of research at Corelogic pointed out that there has been a consistent trend towards smaller month on month declines through the first half of the year. But since peaking, the national index is down 8.3%.

‘The stabilisation in housing values is becoming more broadly based, with five of the eight capital cities recording a subtle rise in values over the month, while the regional areas of South Australia, Tasmania and Northern Territory also recorded a lift in housing values in July,’ he said.

Nationally property prices were unchanged month on month at a median value of $517,895, but quarter on quarter they were down by 0.5% and year on year down by 6.4%.

According to Lawless, a number of factors are supporting the turnaround in housing conditions, however lower mortgage rates, improved access to credit, a boost in housing market confidence post the federal election and recent tax cuts are likely the primary drivers.

Other factors include improvements in housing affordability and a reduction in advertised supply levels, all of which is creating a stronger selling position for vendors.

‘Despite an unprecedented amount of new apartment stock entering the market, Sydney and Melbourne unit values have consistently outperformed the detached housing sector through the downturn, and this trend is continuing into the recovery phase,’ said Lawless.

Sydney house values remain 0.2% lower over the past three months, while unit values have shown a slight rise of 0.02%. In Melbourne, house values were down 0.3% over the most recent three month period while unit values are 1.1% higher.

The stronger performance across the unit sector may be attributable to ongoing affordability challenges in Sydney and Melbourne which, according to Lawless, could be driving demand towards the medium to high density sector.

‘Values for higher density dwellings are generally lower, however we may see some dampening of unit values in coming months across those precincts where supply is elevated as the large number of high rise off the plan apartment sales moves into the re-sale market,’ he added.