Melbourne has overtaken Sydney as the nation's worst-performing housing market, and suffered its first annual price drop in almost six years.
Key points:
- Data from property analysts CoreLogic points to accelerating housing downturn across the country
- Prices in Melbourne have dropped for the first time in six years, and at a greater rate than Sydney
- The national drop was the fastest since 2012, and are caused by many different factors
Property prices in Australia's second-largest city fell last month (-0.9pc) and over the past quarter (-1.8pc) — versus Sydney's slightly smaller drop in July (-0.6pc) and over the past three months (-1.1pc).
However, on a yearly basis, the result is different. Darwin remains the weakest annual performer, down 6.2 per cent.
This compares with Sydney (-5.4pc), Perth (-2.3pc) and Melbourne (-0.5pc) over the past year.
These are some of the results from property analysts CoreLogic that point to an accelerating housing downturn across the country.
Fastest national drop since 2012
On a national level, Australia's dwelling values fell at their fastest rate since 2012 — down in the last month (-0.6pc), quarter (-0.9pc) and year (-1.6pc).
This was driven by "long-running declines in Perth and Darwin", Sydney and Melbourne's quickening decline due to tighter lending conditions, and slowing growth in regional areas.
"I think credit is going to remain tight for the foreseeable future," CoreLogic's head of research Tim Lawless said.
"We don't expect to see any real rebound in investment activity, for example.
"We will continue to see this fairly tight credit situation dampening property market exuberance, going forward."
Despite falling prices in the Harbour City, Sydney and Hobart remain polar opposites on the affordability spectrum.
Sydney's median dwelling price was $863,769 (a figure which includes houses and apartments), while Hobart's was $435,833.
In addition, Sydney's median house price fell back below $1 million — down to $998,270.
Hobart remained the best-performing market by far, with its prices surging 11.5 per cent in the past 12 months.
It was followed, not very closely, by Canberra (+2.4pc), Brisbane (+1.2pc) and Adelaide (+0.7pc).
Even the Tasmanian capital's booming property market slowed to a crawl last month — remaining flat in July.
"We can't see any factors that may halt or reverse the housing market's trajectory of subtle declines over the second half of 2018," Mr Lawless said.
"The slowdown in credit growth is attributable almost entirely to less investment lending, where growth is tracking at a record low of 1.6 per cent annually."
Premium versus lower-end market
"The starkest annual performance differential is in Melbourne, where the top quartile has seen values fall 4.1 per cent over the past 12 months," Mr Lawless said.
In comparison, he noted "property values across the lower quartile are 7.5 per cent higher".
There was also a similar trend in Sydney — with prices at the more expensive end of the market falling sharply by 8 per cent over the past year.
Mr Lawless said that tougher lending conditions, particularly those imposed on borrowers with high debt-to-income ratios, are "likely be be dampening the amount of funds available for purchasing expensive dwellings."
Lower-priced Sydney properties (the bottom 25 per cent in terms of price) fell by a much lower 1.8 per cent over the past 12 months.
"The surge in first home buyer activity in evidence since stamp duty concessions were introduced across New South Wales and Victoria in July last year has propped up demand across the more affordable end of the housing market," Mr Lawless explained.
The other capital cities experienced "substantially less variation" in that regard.
Source: http://www.abc.net.au/news/2018-08-01/corelogic-housing-price-downturn-accelerates/10060036
Updated