Not too long ago, Sydney and Melbourne home owners had plenty to crow about. Inflated house prices were the norm. People’s perceived wealth was skyrocketing. And when it didn’t look to be slowing down, people happily took on ever more debt to get onto the coveted property ladder.
Now that ladder looks to be sinking faster than homeowners can scale the rungs. And it could spell major trouble for the Australian economy in the years ahead.
Weaker house prices in Sydney and Melbourne have continued to drag down the national market, with a 0.5% drop in September marking 12 months of consistently falling prices.
Property consultant CoreLogic’s national hedonic home value index showed a broadening of the housing market correction, with national values down 2.7% since peaking 12 months ago, and regional markets also slowing down.
House values were lower in five of the eight capital cities last month, but analysts said it was weakening conditions in Melbourne and Sydney, down 0.9 and 0.6% respectively for the month, that continue to weigh heaviest.
‘While the housing market downturn is well entrenched across Darwin and Perth where dwelling values remain 22.1% and 13.2% lower relative to their 2014 peak…Sydney and Melbourne are now the primary drag on the national housing market,’ CoreLogic’s head of research Tim Lawless said.
Sydney’s annual loss has tipped over 6% for the past 12 months, while Melbourne has dropped 3.4%.
‘Not only are these among the largest annual falls across the capital cities, but considering (they) comprise approximately 60% of the national value of housing…(they) have a substantial drag down effect,’ Mr Lawless said.
Perth and Darwin have lost 2.8 and 3.7% respectively for the year but prices in Hobart, however, are going the other way, up 0.4% in September and 9.3% annually.
Prices in the nation’s capital have also bounced with Canberra prices up 0.3% for September and 2% for the year.
Losses might not have been as severe in regional housing markets over the past year but the latest data shows a slowdown could be afoot.
The combined regional dwelling values were down 0.2% in September and 0.9% for the quarter, but posted an annual gain of 1.2%.
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The Australian Tribune with AAP