Property values
According to CoreLogic’s March 2019 Home Property Value Index, six of eight Australian capital cities saw dwelling prices decline during the month, with Canberra values holding firm while Hobart values were 0.6 per cent higher.
The national median dwelling price value, which has been trending lower for seventeen months and has fallen by a cumulative 7.4 per cent since peaking in October 2017, remains 15.9 per cent higher than five years ago.
Darwin and Perth, where weak housing market conditions were driven by the post mining boom and weaker economic and demographic conditions, saw dwelling values fall by a cumulative 27.5 per cent and 18.1 per cent respectively since peaking in 2014. Housing is now very affordable in both these capital cities and first home buyers seem much more active compared to other cities across the nation.
Dwelling values remained at record highs in Hobart and across regional Tasmania. In other cities values were only marginally lower including Canberra (-0.2 per cent), Adelaide (-0.5 per cent) and Brisbane (-1.6 per cent) and regional Victoria (-0.8 per cent). Although housing market conditions remain relatively healthy in these regions, conditions have noticeably softened over the past twelve months, with values either slipping or the pace of growth slowing.
Residential listings
International investment banking company, Morgan Stanley, reported March is typically the strongest seasonal month for Australian house prices and residential listings. The recent slowdown of falling house prices and listing availability is likely due to seasonality, rather than the prospect that house values may soon hit bottom.
Vacancy and rental rates
Rents across our nation’s capital cities slipped 0.1 per cent lower over the twelve months ending March 2019, the first negative reading since at least May 2005. CoreLogic reports the negative change in annual rental activity was heavily influenced by the Sydney market, where weekly rents were down 3.1 per cent over the year. Every other capital city apart from Darwin recorded a slight rise in weekly rents over the year.
During March, CoreLogic also noted that gross rental yields have moved away from their record lows in both Sydney and Melbourne. However, these cities are still recording the lowest gross rental yields amongst the capital cities at 3.5 per cent and 3.6 per cent respectively.
Other capital cities recorded average gross rental yields of 4.5 per cent, with Darwin and Hobart showing a higher yield profile. Nationally, regional markets are reflecting a higher gross rental yield relative to the capital cities.
Finance and interest rates
The upcoming federal election and potential changes to negative gearing and Capital Gains Tax (CGT) will continue to cause uncertainty for property investors in a market that has already been influenced by tighter lending policies and economic conditions locally and internationally.
Some prospective buyers and sellers may be delaying their housing decisions until after the election. However, there is no guarantee investor certainty will improve post-election should there be a change of government and the opposition’s plans to wind back negative gearing and halve the CGT concession go ahead.
The March 2019 CoreLogic report cites other factors are likely to help offset the housing market weakness, such as an expected cut to interest rates later this year. This could result in lower mortgage rates.