Home prices continue to fall in Australia's largest cities

Elena Corral / EyeEm
  • Australian home prices continued to slide last week with modest declines reported across a majority of mainland state capitals.
  • Year to date, prices have fallen by between 2.2% to 3.5% in Sydney, Melbourne and Perth. In contrast, median values have increased marginally in Brisbane and Adelaide over the same period.
  • Spring is traditionally the busiest period for activity in Australia’s housing market as listing levels increase.

Australian home prices continued to slide last week with modest declines reported across a majority of mainland state capitals.

According to CoreLogic, the median home price fell by 0.1% in average weighted terms, leaving the decline over the past for weeks at 0.4%.

Prices fell by 0.1% apiece in Sydney, Melbourne and Brisbane over the week, while Perth’s median value fell by a larger 0.3%.

Adelaide managed to buck the downdraft in other capital cities, registering an increase of 0.2%.

CoreLogic

Over the past month, prices in the South Australian capital have risen 0.3%, a comparatively strong performance given values in the other capitals have fallen by between 0.1% to 0.7% over the same period.

Reflective of recent gains, Adelaide prices have now risen 0.7% this year. Brisbane prices have also gained 0.3% for the year. In contrast, values in the other state capitals have all fallen by 2.2% or more in Perth, Sydney and Melbourne.

Combined, the median price in the mainland state capitals has fallen 2.7% so far this year in average weighted terms.

The same divergence in the year-to-date performance is also evident in price movements over the past 12 months with modest gains in Adelaide and Brisbane offset by declines in Sydney, Perth and Melbourne.

Median values have fallen by 5.6%, 2.2% and 1.6% respectively in these capitals over the past year, leaving the national decline at 3.1%.

That largely reflects that Sydney and Melbourne contain around 40% of all Australian homes, and account for around 60% of the nations entire housing wealth.

CoreLogic

While the declines in those cities largely explains the decline in prices nationally over the past year, driven by tighter lending standards, still-acute affordability constraints and reduced local and offshore investor activity, among other factors, another reason behind the reversal in prices in Australia’s largest and most expensive cities has been an increase in properties being put up for sale.

According to CoreLogic, there are currently 22.3% more homes up for sale in Sydney compared to a year ago, and 12.2% in Melbourne, contributing to a 7.6% national increase over the same period.

Total listing levels have also increased in Brisbane, offsetting declines in all other capital cities.

CoreLogic

However, while total listings have risen sharply in Sydney and Melbourne, new listings — defined a properties that have not been put up for sale within the last six months by CoreLogic — have actually fallen by 7.2% in Sydney, and 6.5% in Melbourne, compared to 12 months ago.

That suggests softer market conditions are dissuading some vendors in these cities from putting their property up for sale.

Like Sydney and Melbourne, new listings have also fallen in all other capitals except for Hobart and Canberra compared to the levels seen a year ago.

While a reduction in new listings across the capitals may, at the margin, helped to limit price declines over winter, it will be interesting to see whether that will remain the case in the months ahead as listing levels inevitably increase during spring.

CoreLogic

Will demand also improve to match the increase in supply during what is usually the busiest season for activity in Australia’s housing market?

With spring just days away, we’re about to find out.

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