AUSTRALIA’S housing market downturn continued for the 11th consecutive month in August as access to credit tightened and interest rates began to creep up.
National dwelling values fell by 0.3 per cent over the month to finish 2.2 per cent below their peak in September last year, CoreLogic figures released on Monday show.
Sydney house prices have suffered the biggest declines, finishing August 5.6 per cent lower than a year ago. Conversely, Hobart house prices were up 10.7 per cent year-on-year.
“Weaker housing market conditions can be tied back to a variety of factors, foremost of which is the tighter credit environment which has slowed market activity, especially amongst investors,” CoreLogic head of research Tim Lawless said in a statement.
“Fewer active buyers has led to higher inventory levels and reduced competition in the market. Collectively, these factors have been compounded by affordability challenges, reduced foreign investment and a rise in housing supply.”
Five of the eight capital cities recorded falls month-on-month, with only Adelaide, Darwin and Canberra eking out gains of 0.3 per cent, 0.1 per cent and 0.5 per cent respectively. Sydney was down 0.3 per cent, Melbourne 0.6 per cent, Brisbane 0.2 per cent, Perth 0.6 per cent and Hobart 0.1 per cent.
The median values in each city at the end of August were:
• Sydney $855,287
• Melbourne $703,183
• Brisbane $493,922
• Adelaide $438,466
• Perth $454,007
• Hobart $437,254
• Darwin $439,718
• Canberra $593,886
CoreLogic said the result suggested spring selling conditions may be challenging as more properties came on the market.
It comes after Westpac last week became the first of the Big Four to begin raising interest rates out of cycle with the Reserve Bank, announcing a 14 basis point increase despite the official cash rate remaining on hold at 1.5 per cent.
Suncorp and Adelaide Bank followed suit on Friday, but CommBank, ANZ and NAB have yet to do so. CoreLogic said the news would “send a chill through the housing market”, even though the lift was “only a minor adjustment to rates that have been at 50-year lows”.
Advertised stock levels are already 7.6 per cent higher than the same time last year, despite a 5.7 per cent reduction in “fresh” stock being added to the market.
“The rise in inventory is simply due to a lack of absorption — with fewer buyers, homes are taking longer to sell and clearance rates have trended into the mid to low 50 per cent range,” CoreLogic said.
Mozo property expert Steve Jovcevski has tipped big falls in Sydney and Melbourne but modest gains elsewhere for the season. “It won’t be a positive spring overall for the Australian market,” he said. “It’s definitely not as good a year for investors as it was last year, but it’s probably the year of the first homebuyer.”
A number of major banks have recently downgraded their forecasts for the Australian housing market. NAB predicts house prices will flatten in 2020, with a peak-to-trough fall of 6.5 per cent in Sydney and 2.5 per cent in Melbourne.
ANZ said it expects to see peak-to-trough declines of around 10 per cent in both Sydney and Melbourne in the same period. AMP Capital chief economist Shane Oliver believes Sydney and Melbourne will see declines of 15 per cent while the national average will fall by 5 per cent.