National dwelling values slipped in December last year, led by falls in Sydney, Darwin, Melbourne and Perth, according to the latest CoreLogic Hedonic Home Value Index.
CoreLogic head of research Tim Lawless said that the transition towards weaker housing market conditions has been gradual but clear.
He added that these conditions are likely to continue throughout 2018.
“From a macro perspective, late 2016 marked a peak in the pace of capital gains across Australia.
“In 2017, we saw growth rates and transactional activity gradually lose steam, with national month-on-month capital gains slowing in October and November before turning negative in December.”
Mr Lawless said that the December fall of 0.3 per cent was the catalyst for dragging the national quarterly capital gains into negative territory for the first time since April 2016.
The biggest drags are in Sydney and Darwin.
The index found that Sydney dwelling values are down by 0.9 per cent over the month, to be 2.1 per cent lower over the December quarter and 2.2 per cent lower than their August 2017 peak.
“The city’s annual rate of growth is now tracking at just 3.1 per cent,” Mr Lawless said.
“This is a stark difference to the recent cyclical peak when values were rising at the annual rate of 17.1 per cent only seven months ago.”
Despite this reversal, the head researcher said that Sydney values are still 70.8 per cent higher than their cyclical low point in February 2012.
In Darwin, the housing downturn is entrenched, with values trending lower since May 2014.
“The calendar year saw Darwin values down [by] 6.5 per cent.
“Since the 2014 peak, Darwin housing values have fallen by a cumulative 21.5 per cent. While conditions for capital gains have been exceptionally weak across Darwin, rental prices are down by only 1.5 per cent over the year.”
The index found that Melbourne dwelling values slipped by 0.2 per cent lower in December.
Mr Lawless said that this is the first monthly fall recorded since February 2016.
“The city’s housing market has been more resilient than Sydney due to factors such as stronger population growth, lower affordability hurdles and a higher rate of jobs growth,” the research head said.
“However, the growth trend has been clearly moderating since late 2016, and Melbourne’s annual rate of capital gain, at 8.9 per cent, has fallen below double digits for the first time in 11 months.”
In Brisbane, the index reported the housing market continuing along a steady growth trajectory, with dwelling values unchanged in December and only 0.3 per cent higher over the December quarter.
“Annual capital gains are only slightly higher than inflation, tracking at 2.4 per cent over the calendar year.”
He said that the gap between houses and units in Brisbane is “stark”, with house values up by 3.1 per cent while unit values have slipped by 1.2 per cent.
“The decline in unit values can be attributed to concerns around oversupply in key sectors of the Brisbane market,” Mr Lawless said.
Conditions across the Adelaide housing market remained stable, with dwelling values continuing to edge higher, up by 0.2 per cent month-on-month and 0.3 per cent over the final quarter of 2017.
In Perth, the housing market remained soft.
But Mr Lawless said that the rate of decline continued to improve with the annual fall, at 2.3 per cent, being the slightest year-on-year decline since May 2015.
The index found that the best performing capital city in 2017 was Hobart.
Mr Lawless said that dwelling values rose by 12.3 per cent in Hobart, almost five times higher than the city’s decade average annual rate of capital gain.
“Despite the strong capital gains, housing prices remain extremely low in Hobart relative to the larger mainland capital cities,” the head researcher said.
“The median house value is tracking at $424,251, 54 per cent lower than Sydney and 49 per cent lower than Melbourne.”
In Canberra, values edged 0.2 per cent higher in December, to be up by 1.0 per cent over the final quarter of the year and 4.9 per cent higher throughout 2017.