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Some markets are softening, others not so much, and some will rise again in 2019, according to CoreLogic research.
Australia’s overall property market in 2018 declined by 4.1 per cent over the 12 months to November 2018, and was described by CoreLogic research analyst Cameron Kusher as “slowing quite rapidly”.
This was the largest annual fall since December 2011.
Sydney saw the largest annual fall for dwelling values out of all the capital cities at 8.1 per cent, its highest since May 1983. Melbourne followed with a decline of 5.8 per cent, Perth with 4.2 per cent and then Darwin with 0.8 of a percentage point.
Hobart, meanwhile, was the highest-growing capital city for dwelling values with a rise of 9.3 per cent, followed by Canberra with 4 per cent, Adelaide with 1.4 per cent and Brisbane with 0.3 of a percentage point.
The core of this slowdown, according to Mr Kusher, was not an economic slowdown or higher mortgage rates, but the combination of tightening credit conditions, a growing economy and mortgage rates at near record lows.
“Since the onset of financial deregulation in the mid-1980s, credit access at the time became a whole lot easier for borrowers,” Mr Kusher said.
“However, since macro-prudential policies implementation began in 2015, accessing credit has become incrementally more difficult and where investors and interest-only borrowers are having to pay higher mortgage rates.”
2019
Mr Kusher did not expect conditions to change much in the new year, and it’s likely we will see “more of the same”, more national declines driven by Sydney and Melbourne.
However, he did say that value growth is expected to either slow or hold steady in the rest of Australia amid tighter credit conditions.
“2019 credit conditions are expected to remain tight — a likely catalyst towards dampening housing market conditions. February will see the release of the banking royal commission findings and recommendations and will potentially deliver significant changes for the mortgage landscape,” Mr Kusher said.
“To date, the Reserve Bank has not been overly concerned with falling dwelling values largely because it has mostly been contained to Sydney and Melbourne and both cities have seen a substantial run-up in values over recent years.
“While that may be the case, if the slowing housing market delivers an impact to consumer consumption, we could then see a change of tact. Were this to happen, we could see some of the temporary macro-prudential measures eased back throughout 2019.”
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