Housing prices in Australia declined for a seventh consecutive month up to 30 April 2018. Prices fell in Sydney, Melbourne and Brisbane, while annual price growth across Australia was negative for the first time since November 2012. According to CoreLogic’s home value index, housing prices declined by 0.1% in April in average weighted terms
Just like recent months, softening house prices were mostly concentrated in Australia’s capital cities and especially in Melbourne and Sydney. Housing prices declined by 0.4% in Melbourne and Sydney in April. According to Tim Lawless, CoreLogic’s Head of Research, the ongoing weakness in the Sydney and Melbourne markets can be attributed to growing lending restrictions for property investors.
Given the largest amount of investment activity occurred in Sydney and Melbourne, as housing prices increased rapidly in recent years, it’s natural that these markets would soften as lending restrictions for property investors grow.
In Australia’s smaller capital cities, prices remained flat or slightly higher. Prices in Brisbane declined by 0.1%, while in Perth prices remained flat. In Hobart, housing prices increased slightly by 1.2%, while Darwin and Canberra both increased by 0.6%. These figures indicate that the most affordable cities in Australia remain most resilient as housing prices decline in Sydney and Melbourne, while unit prices outperformed houses across all cities in April.
Unit prices increased 0.1%, while housing prices declined by 0.4%. The reversal of typical housing market trends in Australia continued with regional house prices rising by 0.5% and regional unit prices rising by 0.3%. This means regional markets outperformed the markets in capital cities in April.
In the month ahead, Lawless doesn’t expect recent declines across Australia’s capital cities to turn into anything more sinister. It’s expected that low interest rates and strong population growth across the country should see housing prices smooth out. A key risk to this scenario is if Australia’s migration intake is reduced, which could see declining population growth in Sydney and Melbourne — Australia’s most popular cities for newcomers.