Property prices in Australian cities down for ninth month in a row

Residential property prices in Australian state capitals fell for a ninth month in a row in June to a median value of $654,366, the latest index data shows.

Prices are falling across all measures, month on month by 0.3%, quarter on quarter by 0.8% and year on year by 1.6%, according to the figures from real estate analysis firm CoreLogic and prices now well below their peak nationally in September 2017.

The biggest drop in annual growth was in Darwin with a fall of 7.7% to $433,309, followed by Sydney down 4.5% to $870,554, and by 2.1% in Perth to $461,149 while prices rose by 2.3% in Canberra to $587,867.

Prices rose marginally by 1.1% in Brisbane and Adelaide to $495,242 and $439,215 respectively and by 1% in Melbourne to $716,774. But it is Hobart in Tasmania that is leading the market with annual growth of 12.7% to $436,899.

However, CoreLogic research director Tim Lawless, pointed out that despite recent and consistent monthly falls, national dwelling values remain 32.4% higher than five years ago. ‘This highlights the wealth creation that many home owners have experienced over the recent growth phase, but also the fact that recent home buyers could be facing negative equity,’ he said.

‘Tighter finance conditions and less investment activity have been the primary drivers of weaker housing market conditions and we don’t see either of these factors relaxing over the second half of 2018, despite APRA’s 10% investment speed limit being lifted this month,’ he added.

The 2018 second quarter results saw national dwelling values fall by 0.5%, driven by a 0.8% drop in values across the combined capital cities. The capital city decline was partially offset by a 0.6% rise in values across the combined regional markets. The largest decline amongst the capitals over the quarter was in Melbourne, down 1.4%, followed by Sydney down 0.9%, Darwin down 0.8% and Perth down 0.7%.

Hobart continues to show the strongest capital gain trend amongst the capital cities with dwelling values rising a further 2.3% over the past three months. Although housing market trends remain very positive across Hobart, the quarterly pace has eased relative to the March quarter when values were up 3.4%. Values also trended higher across Adelaide, up 0.9%, Brisbane up 0.3% and Canberra up 0.2% over the second quarter of 2018.

Outside the capital cities, the combined rest of state regions recorded a 0.6% rise in prices over the quarter, although values did show a moderate fall in regional Queensland of 0.2% and regional Western Australia of 0.1%. The regional markets of Victoria have shown the highest rate of capital gain quarter on quarter at 1.8%, closely followed by regional Tasmania up 1.7%.

Declines are more pronounced across the most expensive quarter of the market. Based on the CoreLogic stratified hedonic index, prices across the most expensive quartile of capital city properties were down 1.5% over the past three months while the least expensive quartile saw values hold firm. Similarly, over the past 12 months, the most expensive end of the market recorded a decline of 3.6%, while the least expensive end of the market recorded a 1.4% gain.

Declines across the most expensive sector of the capital city market is largely attributable to the falls in Sydney and Melbourne, where the upper quartile of property values fell by 7.3% and 2.5% respectively over the past 12 months.

‘A surge in first home buyer activity has helped support demand across the more affordable price points in these cities,’ Lawless said.