National dwelling values fell in the March quarter

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Dwelling value growth throughout Australia has officially come to a halt, with national dwelling values falling by -0.5% over the March quarter. Although the quarterly rate of decline has slowed compared to recent months, it was still the largest fall in values over a first quarter of the year since 2016, according to CoreLogic’s Quarterly Review for Q1 2018.  

Over the 12 months to March, values rose by 1.2%, much lower than the 9.1% recorded a year earlier, and the slowest annual rate of growth since December 2012.

The slowdown in dwelling value growth is occurring in most capitals, with Brisbane and Hobart the only two cities to have recorded value falls to-date. Sydney—Australia’s largest and most expensive housing market—is leading the current slowdown, with values dropping by 3.9% from their peak.

Perth and Darwin have been in serious decline for a number of years, with values dropping by -10.8% and -21.6% respectively. The falls in Melbourne (-0.7%), Adelaide (-0.4%), and Canberra (-0.2%) have been fairly minor to-date.

“The decline in dwelling values across most capital cities is interesting. A fall in values in Sydney and Melbourne is somewhat understandable given surging values over recent years which have led to deteriorating housing affordability and record low rental yields,” CoreLogic said. “Furthermore, investors were a key driver of demand and increased regulation, leading to higher interest rates [which led] to a slowing of demand from this segment.

“But outside of Sydney and Melbourne, values have not really surged nor have investors comprised a larger than normal proportion of market activity. The recent weakness is likely linked to overall housing market sentiment and tighter credit policies impacting on other capital city markets.”

While capital city housing markets are seeing weakened conditions, regional markets, particularly those in lifestyle areas close to capitals cities, are faring much better.

Geelong is now experiencing a faster rate of annual growth than Melbourne. Annual growth in Illawarra, as well as Newcastle and Lake Macquarie, is now stronger than in Sydney.

The Gold Coast and Sunshine Coast have recorded stronger annual value growth than Brisbane.

“It seems that many of those who have seen the value of their properties rise substantially in Sydney and Melbourne over recent years may be cashing out and moving to lifestyle markets where housing costs are much lower than those in these capital cities,” CoreLogic said. “Additionally, the more affordable price points are likely seeing demand ripple away from Sydney and Melbourne as buyers look to purchase within their budgets.”

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