Sydney home prices continue to slide

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  • Australian home prices fell modestly in early April in weighted terms, reflecting continued weakness in Sydney.
  • Over the past year, Australian price growth has slowed to just 0.4%, and will likely turn negative in the coming month should current trends be maintained.
  • Total property listings have grown strongly in Sydney and Melbourne over the past 12 months.

Sydney home prices continued to fall in early April, continuing the trend seen in recent months.

According to CoreLogic, prices in Australia’s largest and most expensive housing market fell by 0.1% in the first full week of April which, along with flat performances from Melbourne and Brisbane, saw prices nationwide fall by 0.1% in average weighted terms.

However, as seen in the table below from CoreLogic, the softness in Sydney and Melbourne prices masked stronger performances from Australia’s smaller mainland state capitals over the same period with prices inching up by 0.1% in both Adelaide and Perth.

Source: CoreLogic

Over the past four weeks, prices in Perth have grown by 0.4%, a performance in stark contrast to the trend of prior years where prices in the Western Australian capital underperformed the national average.

Of the remaining state capitals, prices fell over the same period, ranging from a drop of 0.3% in Melbourne to falls of 0.1% apiece in Brisbane and Adelaide.

With Sydney down 0.2%, it saw prices nationwide fall by the same margin in average weighted terms.

So far this year, and despite a recent divergence in prices in individual capitals, prices have fallen in each of Australia’s mainland state capitals, ranging from 1.9% in Sydney to 0.1% in Brisbane and Perth.

Reflective of the recent slowdown, average price growth over the past year slowed to just 0.4%, a figure that is likely to turn negative in the period ahead in the absence of an unexpected rebound in the Sydney and Melbourne markets.

Source: CoreLogic

Prices in Sydney are now down 2.6% from a year ago, a larger decrease than the 2.3% drop recorded in Perth over the same period.

Elsewhere, annual price growth in Melbourne has slowed to 4.6% — well below the double-digit gains seen this time a year ago — while those in Brisbane and Adelaide have increased by 1.1% and 1.7% respectively.

Contributing to the recent slowdown in Sydney and Melbourne, CoreLogic reports the number of properties up for sale in these markets has risen solidly over the past year, lifting by 28.6% and 6.5% respectively to 26,536 and 30,249 dwellings.

That’s contributed to a 6.8% increase in listings nationally to 110,412 over the past year, masking falling stock availability in all other capitals aside from Brisbane where they have risen by 3.4%.

Source: CoreLogic

The decline in stock availability in Australia’s smaller capitals, along with other factors, points to prices in these areas outperforming the national average in the period ahead, says Shane Oliver, head of Investment Strategy and chief economist at AMP Capital.

“A further tightening in lending standards as banks get tougher on borrowers’ income and living expense levels along with rising supply and more realistic capital growth expectations by home buyers will see Sydney and Melbourne property prices fall another 5% or so this year with further falls likely next year,” he says.

“In contrast, home prices in Perth and Darwin are either at or close to the bottom. Price growth is likely to be moderate in Adelaide and Canberra, but it may pick up a bit in Brisbane thanks to stronger population growth and the boom in Hobart has a way to go yet.”

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