Housing market outlook improving in Australia as downturn slows

The pace of decline in Australia’s residential housing market slowed in May, down nationally by 0.4%, the smallest month on month fall for a year, the latest index data shows.

But nationwide prices are still down by 7.3% year on year to a median value of $519,537 and quarter on quarter they are lower by 1.5%.

CoreLogic head of research Tim Lawless pointed out that the improvement is primarily being driven by a slower rate of decline in Sydney and Melbourne where housing values were previously falling at the fastest rate of any capital city.

Money on month prices in Sydney fell by 0.5% to $776,135 but they are still 10.7% lower than in May 2018 while in Melbourne they fell by 0.3% month on month to $619,804 and are down 9.9% year on year.

Prices have also continued to fall in other cities. In Brisbane they were down 0.5% month on month and 2.3% year on year to $484,882. In Perth they fell by 1% on a monthly basis and are 8.8% lower than May 2018 at $436,090. While in Darwin they are down 1.6% and 8.6% respectively to $393,298.

The only city to see growth overall was Adelaide with prices up 0.2% month on month and up 0.4% year on year to $431,702. In Hobart, which has led housing market growth, prices fell by 0.4% on a monthly basis and are just 3.4% higher than a year ago at $445,235. In Canberra prices were down 0.2% month on month but are 2.4% up year on year at $587,583.

Since peaking in October 2017, national prices have reduced by 8.2%, with values across the combined capitals index down 10.1% while regional values have been more resilient, falling by 3% since peaking.

Larger capital city falls have been recorded in Darwin, down 29.5%, and Perth down 19.2%, as well as regional Western Australia down by 32.5% where the mining downturn has led to persistently weak economic and demographic conditions.

Lawless pointed out that these regions now represent some of the most affordable housing markets around the country, a factor which explains the high proportion of first home buyer participation in these areas.

The last time values were this low in Darwin was March 2017, in Perth values were previously this low in April 2006 and values haven’t been this low across regional Western Australia since July 2005.