Money House prices in Australia's capital cities are threatening 'negative growth' in 2018

18:51  02 january  2018
18:51  02 january  2018 Source:   businessinsider.com.au

Australian house prices look set to fall in 2018

  Australian house prices look set to fall in 2018 When it's all said and done, 2017 will be regarded as a year of two halves for Australia's broader housing market.The first, a period of rip-snorting price growth, especially in Australia's southeastern capitals, fueled by low-interest rates, strong population growth, lower-than-usual market turnover and an abundance of investor activity.

National property markets ended 2017 with a whimper, with half of Australia ' s capital cities recording falling house prices in December. "There's going to be a negative growth rate, probably most similar to the 2000 to 2003 [time period] when prices fell by about 7 per cent."

House prices in the major eastern capital cities of Melbourne and Sydney have risen sharply over the past few years, driven by demand fundamentals, including As the staff note, recent strong house price growth in the eastern states of Australia reflects an excess of housing demand over supply.

  House prices in Australia's capital cities are threatening 'negative growth' in 2018 © Provided by Business Insider Inc

After starting in Sydney earlier in the year, Australia's housing market slowdown now appears to be spreading across Australia.

According to CoreLogic's Home Value Index for December, dwelling prices fell by 0.3% last month on an average weighted basis, dragged lower by falls in Sydney and Melbourne, Australia's largest and most expensive housing markets.

Prices in capital cities fell by 0.4% while those in regional areas rose by 0.2%. By type of dwelling, prices for houses and units both fell by 0.3%.

“In 2017 we saw growth rates and transactional activity gradually lose steam, with national month-on-month capital gains slowing to 0% in October and November before turning negative in December," said Tim Lawless, head of research at CoreLogic.

Comment: What 2018 has in store for interest rates and house prices

  Comment: What 2018 has in store for interest rates and house prices While the economy is expected to continue its gradual pick-up, it will be somewhat constrained until households begin to feel good again.

"The city ' s housing market has been far more resilient to negative growth compared with Sydney due to factors such as Also read: 10 things you need to know this morning in Australia . But the city ' s home prices remain extremely low relative to the larger mainland capital cities , Corelogic said.

“The city ’ s housing market has been far more resilient to negative growth compared with Sydney due to factors such as stronger population growth , lower affordability hurdles and a higher rate of But the city ’ s home prices remain extremely low relative to the larger mainland capital cities , Corelogic said.

"Nationally, dwelling values were 4.2% higher over the 2017 calendar year which is a slower pace of growth relative to 2016 when national dwelling values rose 5.8% and in 2015 when values nationally were 9.2% higher."

Lawless said the slowdown was being driven by price movements in capital cities which fell 0.5% over the December quarter, masking a 0.5% rise in regional areas over the same period.

Almost every suburb in Sydney has seen a 50 percent increase in house prices in the last 5 years

  Almost every suburb in Sydney has seen a 50 percent increase in house prices in the last 5 years Nearly every suburb in Sydney and nearly half of all suburbs in Melbourne have posted median house price gains of more than 50 per cent since the start of the five-year housing boom in 2012, research by LJ Hooker shows. Australia's most expensive suburb Point Piper posted a 176 per cent increase in prices, while Llandilo, a growing western Sydney suburb had a 164 per cent increase. Other strong performing suburbs in Sydney include Clareville on the northern beaches, Gosford on the Central Coast and Galston in the northwest.Actual median prices in these areas stretch across a wide spectrum. Point Piper's median price is $12.

Combined, the movements point to flat price growth in Australia ’ s capital cities in average weighted terms over the year, a steep step down from the the levels seen in previous years. “ Australia ’ s housing prices are very cyclical and usually driven by mortgage rate changes.

Australia ' s property market is now worth almost .9 trillion - a record high. Photo: Suzanne White. Sydney house price growth edged into negative territory in the December quarter, and has now House values across Sydney are forecast to decline 4.2 per cent in 2018 before a recovery in 2019

This table from CoreLogic shows price changes by individual capital over the month, quarter and year.

a screenshot of a cell phone© Provided by Business Insider Inc

Fitting with the theme seen in prior months, the weakness in December was yet again led by Sydney, Australia's largest and most expensive city.

“Sydney’s housing market has become the most significant drag on the headline growth figures,” says Lawless.

"The city’s annual rate of growth is now tracking at just 3.1%, a stark difference to the recent cyclical peak when values were rising at the annual rate of 17.1% only seven months ago."

From the recent peak in August 2017, prices in Sydney have now fallen by 2.2%.

Contributing to the national weakness, prices in Melbourne also fell for the first time since February 2016 in December.

“The city’s housing market has been far more resilient to negative growth compared with Sydney due to factors such as stronger population growth, lower affordability hurdles and a higher rate of jobs growth," said Lawless.

Sydney property prices tipped to fall 10 per cent in 2018

  Sydney property prices tipped to fall 10 per cent in 2018 Sydney property prices are tipped to pull back by up to 10 per cent over the next 12 to 18 months, experts warn, after real estate markets ended the year with a whimper. The harbour city is leading the country's property downturn, with prices falling 0.9 per cent in December. Prices were down 2.1 per cent for the quarter, well below price growth of more than 17 per cent in mid-2017, said the head of research at property research data group CoreLogic, Tim Lawless.Sydney property prices are now 2.2 per cent below the market's peak in August 2017.

In data released last week, CoreLogic found that it took an average of 40 days for a property to sell in Australia ’ s capital cities in December, up from 37 days one year earlier. In line with other housing market indicators such as house prices , auction clearance rates and housing finance growth , the

Australia ’ s housing system serves some well and fails other dismally. House prices in capital cities have reached prohibitive heights for those on, or • Secure, long-term and coordinated public and private investment streams deliver steady and adequate growth in the stock of affordable housing

"However, the growth trend has been clearly moderating since late 2016 and Melbourne’s annual rate of capital gain, at 8.9%, has fallen below double digits for the first time in eleven months."

With prices in Sydney and Melbourne falling 0.9% and 0.2% respectively, it managed to offset price gains in most other Australian capitals and regional areas during the month, leaving the national price decline at 0.3% in weighted terms.

And, with prices flat in October and November, that saw quarterly price growth turn negative for the first time since early 2016.

"The 0.3% fall in December was the catalyst for dragging the quarterly capital gains result into negative territory for the first time since the three months ending April 2016," said Lawless.

By individual city, prices Sydney fell by 2.1% over the quarter, offsetting gains of between 0.1% to 3.1% in all other capitals aside from Darwin over the same period.

That Sydney-led weakness saw the annual pace of growth slow to 4.2%, less than half the annual rate reported in the first half of 2017.

By location, prices in capital cities grew by 4.3%, slightly outpacing growth of 3.8% in regional areas.

Property hotspots in 2018 as market conditions tipped to weaken

  Property hotspots in 2018 as market conditions tipped to weaken Why Hobart could be the next boom town.Tim Lawless, head of research at property data firm CoreLogic, believes that while the market will "gradually lose steam", it will still be active as the forces of demand and supply are still in play.

australian economy. Sydney house prices continue to fall in October. What does a million dollars buy in Aussie capital cities ?1:17. Buying a home in Australia can cost a fortune. “Despite the stronger growth profile, Melbourne dwelling values are now rising at their slowest quarterly pace

Jump to navigation Jump to search. The Australian property market comprises the trade of land and its permanent fixtures located within Australia . The market has shown steady growth of around 3% per annum since the 1970 s . Since the 1990 s , however, prices have risen by around 6% per annum.

However, as seen in the chart below, that trend could well reverse in the coming months should prices in Sydney and Melbourne continue to weaken.

a close up of a map© Provided by Business Insider Inc

To Lawless, it probably will, with the trends of late 2017 likely to be repeated in the year ahead.

“In 2018, the housing market performance is likely to be significantly different relative to previous years," he says.

"We’re likely to see lower to negative growth rates across previously strong markets, more cautious buyers, and ongoing regulator vigilance of credit standards and investor activity.”

And, unlike 2016 when two interest rate cuts from the Reserve Bank of Australia (RBA) acted to reignite the east coast housing market, Lawless says the price weakness on this occasion is likely to be more entrenched.

"We’re not likely to see a similar lifeline thrown to the housing market this time around via lower interest rates or loosening credit conditions," Lawless says.

“Regulators are likely to be keeping a close eye on credit trends with particular focus on investment credit and interest only lending, and the next move in interest rates is more likely to be up not down."

Lawless says that he expects softer housing market conditions in 2018, driven by a continuation of the slowdown that is clearly evident across Sydney and, to a lesser extent, Melbourne.

“While the headline figures are set to weaken, below the surface the individual cities and regions of Australia will continue to operate under their own distinct cycles which are subject to more localised forces of demand and supply," he says.

For those looking for more granular detail on price movements by individual capital city, this table from CoreLogic looks at price movements by time frame and type of dwelling.

a close up of a piece of paper© Provided by Business Insider Inc

Flat week for capital city house prices .
Home values across Australia's five capital cities were flat in the week to January 7, but that's a 0.4 per cent fall on a monthly basis.Home values excluding auctions in the week to January 7 were steady as slight falls in Sydney and Perth offset a marginal gain in Brisbane, according to preliminary figures released Monday by property data group CoreLogic.

Source: http://au.pressfrom.com/news/money/-51009-house-prices-in-australias-capital-cities-are-threatening-negative-growth-in-2018/

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