Sydney house prices see biggest fall for 30 years, dragging rest of Australia down
Property Sydney house prices see biggest fall for 30 years, dragging rest of Australia down
Research finds Melbourne also dropping steeply as economists warn falls could derail wider economy
Sydney house prices have seen their biggest annual fall for nearly 30 years as the city dragged Australiaâs average property values down sharply over the past 12 months.
The national figure fell half a per cent in October, taking the annual drop down to 3.5%, according to figures released by CoreLogic on Thursday, prompting warnings from economists that the market has further to fall and could derail the wider economy.
The biggest decline was in Sydney, which is experiencing the largest annual fall since 1990. Property prices fell 0.7% in the city in October, the data showed, bringing the decline in the past 12 months to 7.4%. Prices have now fallen 8.2% from the peak in August 2017.House prices to fall 20% in Sydney and Melbourne, says top economist Read more
Melbourne, where price falls have not been as dramatic so far, is catching up. The monthly fall was 0.7%, giving a year-on-year decline of 4.7%, and prices in the Victorian capital have fallen further in the past three months than in Sydney (2.1% compared with 2%).
The weakest capital city sub-regions were large ly confined to the Sydney metropolitan area which comprise eight of the 10 weakest capital city sub-markets.
Three of Sydneyâs sub-regions recorded double-digit annual dwelling value declines, led by Ryde, while Melbourneâs prestigious inner eastern suburbs have also had home values fall by more than 10% over the past 12 months.
The regulatory crackdown on lending standards and the reluctance of banks to lend as much money to prospective buyers following the royal commission has impacted the market, CoreLogic said, bringing the steepest national falls since 2012.
The sharp decline in investment purchases had hit Sydney and Melbourne markets particularly hard.
âItâs clear that tighter credit avail ability is acting as a drag on housing demand and impacting adversely on the performance of housing values across most areas of the country,â CoreLogicâs head of research, Tim Lawless, said.
âWhat we have to look forward to in Sydney is further declines considering the factors causing this downturn are tighter credit thatâs not going to change any time soon,â Lawless said.
âAs well as high supply levels and less activity in the market, which seems set to remain for some time.â
Prices also fell in Perth in October but all the other capital cities saw prices flat or rising. Over the past 1 2 months, prices have risen 0.4% in Brisbane, 1.8% in Adelaide and 9.7% in Hobart, with the latter driven by strong demand combined with a shortage of supply. Prices are also falling in regional areas (-0.2% in October and , +0.8% y/y).
However, Sydney and Melbourne represent about 60% of the national market by value and house prices declines in those cities are likely to have a major impact on the economy overall.The looming collapse of the housing market: bring it on! | First Dog on the Moon Read more
Analysts at UBS said the collapse in auction clearance rates in the two cities in recent weeks to below 50% was âa clear sign of a softer marketâ. Prices could drop 10% nationally by 2020, they said, and by 15% in Sydney and Melbourne.
âWe are concerned that without policy easing the largest price fall in decades could break the belief âhouse prices only ever go upâ,â the UBS team said.
âWe expect a fading of the household wea lth effect to see consumption moderate ahead (rather than weaken sharply), but are concerned that a large price fall could see the household saving ratio increase, which would more than offset better jobs and expected tax cuts.â
Capital Economics said this week that falling house prices could reduce household wealth by $800bn over the next few years and knock 0.3 percentage points off economic growth.Topics
- Housing affordability
- Business (Australia)
- Australian economy
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