- Australian home prices fell again last week as continued weakness in Sydney and Melbourne offset stronger performances across the smaller capitals.
- Sydney and Melbourne account for 40% of Australia’s total housing stock, and 60% of Australia’s total housing wealth, meaning movements in these two cities are often influential on national price measures.
- Total property listings in Sydney and Melbourne have increased noticeably over the past year, a performance in stark contrast to that seen in Australia’s smaller capitals.
Australian home prices fell again last week as continued weakness in Sydney and Melbourne offset stronger performances across the smaller capitals.
According to CoreLogic, prices fell by 0.1% in Sydney and Melbourne, dragging the national average down the same amount despite flat-to-higher outcomes in Australia’s other mainland state capitals, Brisbane, Perth and Adelaide.
Sydney and Melbourne account for 40% of Australia’s total housing stock, and 60% of Australia’s total housing wealth, meaning that movements in these two cities are often influential on national price measures.
Indeed, over the past month, national prices slid by 0.2% in average weighted terms, reflecting falls of 0.5% and 0.2% respectively in Melbourne and Sydney.
Over the same period, prices in Brisbane and Adelaide rose by 0.2% and 0.5% respectively.
However, along with a 0.1% drop in Perth’s median price, that wasn’t enough to offset the losses in Australia’s largest housing markets, leading to the decline in the national weighted average.
The same could also be said for price movements so far this year and over the past 12 months.
While national prices have fallen 1.5% this year, and by 1.3% over the past 12 months, that largely reflects what’s happening in Sydney and Melbourne, overshadowing small increases in Brisbane and Adelaide and slower price declines in Perth.
Adding to downside pressure on Sydney and Melbourne home prices, there’s also been a noticeable increase in total property listings in both cities over the past 12 months.
According to CoreLogic, total listings in Sydney have risen 20.4% over the past year to 26,802. They’ve also increased by 7.8% in Melbourne, lifting to 30,862 over the same period.
In contrast, listings have fallen in all other capital cities, ranging from a decline of 27.5% in Hobart to 0.5% in Canberra.
Again, largely reflecting what’s happened in Sydney and Melbourne, total capital city listings have risen 4.2% over the past 12 months to 111,306.
Along with increased supply, coming at a time when tighter lending restrictions based on debt and income levels are curbing demand, especially among investors, it helps to explain why prices in Sydney and Melbourne are under more pressure than in other parts of the country.
Ongoing affordability constraints, along with a slowdown in foreign investment and softer outlook for prices, are other factors that have likely contributed to recent pullback in Sydney and Melbourne valuations.