According to CoreLogic’s Home Property Value Index for February 2019, seven of the eight capitals cities saw house prices decline during the month. The national median house price value also slipped a further 0.9 per cent.
Hobart was the only capital city not to see a price decrease. Their median house price increased by 0.9 per cent in February to $489,000.
Perth and Darwin housing markets were the hardest hit during the month. Both saw declines of 1.4 per cent and 1.3 per cent respectively.
Sydney and Melbourne median house price values continued to drop a further 1.1 per cent and 1.2 per cent during the month of February. Sydney’s median house price value now sits below $900,000, down $14,000 from the month of January, while Melbourne’s median house price value dropped $11,000 over the month.
Compared with March 2018, Sydney’s median house price value has fallen more than $160,000, while Melbourne’s has dropped by $105,000. February saw both capital city markets approaching 11 per cent annual declines (Melbourne 10.6 per cent, Sydney 10.9 per cent).
The strongest capital city housing markets continue to be Hobart, Adelaide, Canberra and Brisbane.
The top performing areas continue to be centered around regional Tasmania and the larger cities/towns surrounding Melbourne. These areas have a mix of lifestyle appeal, relatively affordable price points, access to amenities and transport options linking home buyers and tenants with major work precincts.
The number of properties advertised for sale has been consistently rising due to fewer buyers and longer selling times.
Despite the surge in inventory, new homes being added to the market was down 19 per cent relative to last year, highlighting that vendor confidence is low.
Buyers are firmly in the driver’s seat and in a good position to take advantage of the favourable circumstances.
Vacancy and rental rates
Rental conditions generally improved in February on the back of a seasonal rise in rental demand.
Every capital city except Darwin saw weekly rents edge higher over the month. Regional areas also saw rents increase.
Data from CoreLogic continues to show a trend of sluggish rental conditions across most regions of Australia.
Nationally, rental rates were 0.3 per cent higher in February, but were up only 0.4 per cent over the past twelve months.
Canberra and Hobart stand out as the tightest rental markets, with renters paying an extra 4.7 per cent and 4.6 per cent respectively compared with a year ago. The weakest rental conditions over the past year are in Darwin and Sydney, where rents have slipped 6.1 per cent and 2.9 per cent lower.
Despite the relatively soft rental conditions, gross yields have continued to trend higher, especially across the capital cities where gross yields moved through record lows in August 2017, improving from 3.4 per cent since that time to reach 3.8 per cent at the end of February this year.
Auction clearance rates
CoreLogic reports there were 2,204 capital city homes taken to auction over the week ending 4 March 2019, returning a preliminary weighted average clearance rate of 55 per cent.
The week’s volumes were slightly lower than the week’s previous 2,293 auctions held, which was the busiest week so far this year. The higher volumes last week saw the clearance rate dip below 50 per cent and it’s likely, as volumes increase, we will see clearance rates trend below this mark.
Comparing results to one year ago, volumes are significantly lower than the 3,026 homes taken to auction over the same week in 2018. Given the combined capital cities posted another month on month decline in home values in February, it’s expected vendors will remain reluctant to auction their property while selling conditions remain challenging and year on year volumes will continue to trend lower throughout the year.
Finance and interest rates
Credit aggregates from the Reserve Bank of Australia and housing finance data from the Australian Bureau of Statistics have continued to show a consistent reduction in credit flows and mortgage activity, with a more pronounced downturn in owner-occupier credit growth visible through the second half of 2018 and now into the first quarter of 2019.
It’s now been more than two and a half years since the RBA cut the official cash rate to 1.5 per cent in August 2016. The record-low interest rate is now the longest period rates have been left unchanged since the cash rate was introduced in 1990. What’s more, falling house prices are supporting the case to keep rates on hold even longer.