Property prices fell across capital cities in Australia in January

Property prices are falling in major cities in Australia, led by Sydney where values were down 0.9% in January, the latest index shows.

The only capital city where prices increased in the first month of 2018 was a 1% rise on Hobart while values were unchanged in Brisbane and fell everywhere else, according to the figures from real estate firm CoreLogic.

Overall the national combined housing index fell by 0.3% in January, taking property values 0.7% lower since their recent peak in September 2017 while the combined regional markets have now recorded a stronger monthly change in values relative to the combined capital cities over each of the past four months.

In Sydney prices fell 0.9% month on month and 2.5% quarter on quarter to $884,442 and are now only 1.3% above where they were in January 2017. The next biggest monthly fall was 0.4% in Perth and prices also fell on a quarterly and annual basis by 0.3% and 2.6% to $462,636.

The data shows that prices fell 0.2% month on month in Melbourne, Adelaide and Darwin and by 0.1% in Canberra. In Melbourne they were up 0.1% quarter on quarter and 8% year on year to $721,128. In Adelaide there were also up 0.1% on a monthly basis and up 2.4% year on year to $432,641.

But in Darwin prices were down by 1.6% quarter on quarter and down by 6.4% year on year to $423,926. In Canberra prices may have fallen on a monthly basis but were still up 1% quarter on quarter and by 4.5% year on year to $590,898.

In Brisbane there was no movement month on month and prices are still up 0.1% quarter on quarter and 2.1% year on year to $491,536. But it is Hobart that has performed best with pries up 3.1% quarter on quarter and 12.4% on an annual basis to $409,160.

According to CoreLogic head of research Tim Lawless housing market activity is generally more sedate from late December through to late January, a factor which can contribute towards higher volatility in housing market measurements due to lower activity.

‘Our experience has been that this seasonality doesn’t exert much influence over the trend in hedonic valuations. While January may deliver additional noise in the indices results, the negative monthly result lines up with recent months, which showed a softening trend, particularly in Sydney and, to a lesser extent, Melbourne,’ he explained.

‘In the absence of a catalyst to reinvigorate the market, such as lower mortgage rates or a loosening in credit policies, we expect to see a continuation of softening conditions across these markets,’ he added.

The Sydney housing market has now retraced by 3.1% after home values surged 75% between February 2012 and the recent peak in July last year. With a history of such strong capital gains, the fall in Sydney housing values to date has been mild, according to Lawless, and the vast majority of Sydney home owners remain in a strong equity position.