The Urban Developer
AdvertiseEventsWebinarsUrbanity
Industry Excellence
Urban Leader
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
Urban Leader Awards Logos RGB White
NOMINATIONS CLOSING IN TWO DAYS FRIDAY, SEPTEMBER 12
NOMINATIONS CLOSE IN TWO DAYS URBAN LEADER AWARDS
NOMINATE NOWDETAILS
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
ADVERTISEMENT
SHARE
11
print
Print
OtherTue 01 May 18

Capital City Housing Prices Clock First Annual Fall in Five Years

fcf10fa4-948d-400f-90a0-5485731195a6

Australia’s capital cities recorded their first annual decline in dwelling values since November 2012 as cooling conditions due to tighter lending restrictions continues to impact demand.

It was the seventh straight decline in property prices as weakening house prices in Australia’s two largest markets drag down the national average.

Regional markets fared somewhat better, outpacing capital cities and edging 0.4 per cent higher in April, according to property researcher Corelogic.

The combined capital cities fell by 0.3 per cent on an annual basis compared to an annual increase on regional areas of 2.4 per cent.

Related reading: Property Prices Will Fall 8% in 2018: Morgan Stanley

Corelogic said that the results are the opposite of what we’ve come to expect over the past five years where “regional areas are now outperforming the capitals and units are outperforming houses.”

In April, national dwelling values fell 0.1 per cent which was the seventh consecutive month-on-month fall since values started falling in October 2017 according to Corelogic.

Falls of 0.4 per cent in both Sydney and Melbourne for April contributed to capital city dwelling values falling by 0.3 per cent for the month. Brisbane recorded a small decline of 0.1 per cent, while Perth was flat and Adelaide had a small rise of 0.1 per cent. Darwin and Canberra rose by 0.6 per cent while Hobart continued its strength rising by 1.2 per cent.

Corelogic said that weaker housing market conditions are primarily a factor of tighter credit policies which have dampened investment activity. Annual growth in investor housing credit was just 2.5 per cent over the twelve months to March ’18

Related reading: Expensive Homes Face Greatest Value Slowdown

“Considering investment activity has been substantially concentrated in Sydney and, to a lesser extent, Melbourne, it makes sense that these two markets would feel the brunt of tighter credit conditions for investment lending,” Corelogic head of research Tim Lawless said.

“The slowdown in investment activity has been partially offset by an uptick in owner occupier lending, driven by a surge in first home buyer activity in New South Wales and Victoria.

“Annual growth in owner occupier housing credit, at 8.1% over the twelve months to March ’18, is the fastest pace of growth since late 2016.

“With the recent announcement by APRA that the ten per cent speed limit on investment lending would be lifted from July 1 for lenders who can prove they have met ARPA guidelines over the past six months, it would be intuitive to assume investment activity may lift, however that isn’t likely to be the case.

“In fact, borrowers may face tighter lending conditions as banks focus more on debt servicing and ensuring expenses are more comprehensively assessed and adequately allowed for,” Lawless said.

Related reading: Sydney Housing Market Has Slowed: Here’s How the Construction Pipeline Has Responded

Rental conditions

Nationally, weekly rental rates are now rising at the annual pace of 2 per cent, the same rate of growth as a year ago, but slower than seven months ago when the annual pace of growth was tracking at a recent high of 2.9 per cent.

“Slower rental growth, particularly in Sydney, is most likely a factor of higher levels of investment which has supported a rise in rental stock combined with a surge in first home buyers which has detracted from rental demand,” Lawless said.

Outlook

Corelogic expects that low mortgage rates will keep a floor under housing demand while credit conditions remain tight. Another hold on interest rate movements by the Reserve Bank will reiterate a neutral policy stance for the foreseeable future.

Another factor supporting a soft landing in the housing market is high overseas migration, particularly into New South Wales and Victoria as well as strong interstate migration flows, especially into Queensland, Victoria and Tasmania.

ResidentialAustraliaSector
ADVERTISEMENT
TOP STORIES
Waterloo Affordable Mirvac hero
Exclusive

Affordable Housing Rules Tighten as Proposal Deluge Continues

Clare Burnett
5 Min
Exclusive

Beyond the Aerotropolis: How Airports are Turning into Cities

Taryn Paris
6 Min
Exclusive

Inside the Strategy Behind Australia’s Largest Direct Real Estate Deal

Phil Bartsch
5 Min
Exclusive

Green Premium, Brown Discount: New ESG Regulations Drive Value

Patrick Lau
8 Min
Exclusive

Arup Targets Podium Finish for Brisbane CBD Headquarters

Taryn Paris
6 Min
View All >
Palm Beach Murlong Crescent DA hero
Development

Modernist Plans Up the Design Ante in Gold Coast Hotspot

Phil Bartsch
Liverpool LEC infill affordable hero
Residential

Court Clears Way for 44-Unit Scheme in South-West Sydney

Clare Burnett
Waterloo Affordable Mirvac hero
Exclusive

Affordable Housing Rules Tighten as Proposal Deluge Continues

Clare Burnett
Community housing plans keep rising in NSW thanks to planning bonuses. New reforms aim to keep developers to their word.…
LATEST
Palm Beach Murlong Crescent DA hero
Development

Modernist Plans Up the Design Ante in Gold Coast Hotspot

Phil Bartsch
3 Min
Liverpool LEC infill affordable hero
Residential

Court Clears Way for 44-Unit Scheme in South-West Sydney

Clare Burnett
2 Min
Waterloo Affordable Mirvac hero
Exclusive

Affordable Housing Rules Tighten as Proposal Deluge Continues

Clare Burnett
5 Min
Precision group has gained consent from SCAP to build a 30 storey tower on Rundle Mall Adelaide CBD.
Office

Precision Wins Approval for $260m SA Rundle Mall Tower

Renee McKeown
3 Min
View All >
ADVERTISEMENT
Article originally posted at: https://www.theurbandeveloper.com/articles/capital-city-housing-prices-clock-first-annual-fall-in-five-years