Fall in property prices ‘far less severe’ than reported

According to realestate.com.au’s latest Property Outlook report, the fall in dwelling values reported through 2018 is “far less severe” than suggested by other observers.  

The group’s research found that housing market conditions “remain highly variable” across the country, with most capital cities “either stabilising or recording moderate growth”.

According to the research, Sydney had the largest median price fall in the year to 31 December 2018, with an annual decline of 5.9 per cent, followed by Darwin and Perth (3.6 per cent) and Melbourne (1.5 per cent).

The group also reported that Hobart, Canberra, Adelaide and Brisbane recorded annual growth for 2018, increasing by 8.4 per cent, 1.4 per cent, 1.1 per cent and 0.4 per cent, respectively.

In contrast, CoreLogic’s latest Hedonic Home Value Index reported that over the same period, Sydney’s prices fell by 8.9 per cent, followed by Melbourne (7 per cent), Perth (4.7 per cent) and Darwin (1.5 per cent).

CoreLogic also reported that Hobart recorded the highest rate of annual price growth (8.7 per cent), followed by Canberra (3.3 per cent), Adelaide (1.3 per cent) and Brisbane (0.2 per cent).

Nerida Conisbee, realestate.com.au’s chief economist, said that while the national housing market is “well and truly in the midst of a downturn”, the extent of the correction is less pronounced than initially reported.

“Only four capital cities saw price increases in 2018, with the rest recording declines. Across regional Australia, conditions are even more variable,” Ms Conisbee said.

“The realestate.com.au House Price Index is showing that declines are far less severe than what many other commentators are saying.

“There is no doubt we are seeing price declines in Melbourne and Sydney, but they are not as pronounced as first thought, and we are certainly not seeing the worst conditions in 30 years.”

However, Ms Conisbee said that she anticipates further prices declines in Melbourne and Sydney in the first half of 2019, adding that the outcome of the financial services royal commission and the federal election would dictate the trajectory of home values in the second half of the year.  

“At this stage, it is looking like restrictions on home loans will not be a big focus of the final royal commission. It is unlikely it will get any tougher for home buyers looking to borrow,” she said.

“It is now likely we will see a change of government sometime in the first half of 2019. While a more stable government is good news for property, it is the potential changes to negative gearing and capital gains concessions that could continue to lead to price falls.”

According to the realestate.com.au research, as of 31 December 2018, median price per capital city were as follows:

• Adelaide: $437,511
• Brisbane: $490,000
• Canberra: $591,000
• Darwin: $440,000
• Hobart: $420,000
• Melbourne: $665,000
• Perth: $475,000
• Sydney: $840,000

[Related: House prices plunged by 4.8 per cent in 2018]