National property markets ended 2017 with a whimper, with half of Australia’s capital cities recording falling house prices in December.
And these declines are likely to continue over 2018, according to research house CoreLogic.
Sydney’s home prices dropped by almost 0.9 per cent in the last month of the year, making it the joint-weakest capital with Darwin.
Over the quarter, Sydney house prices were down 2.1 per cent. Its property prices are now 2.2 per cent below the market’s peak in August 2017.
This is in stark contrast to price growth of more than 17 per cent in mid-2017, CoreLogic head of research Tim Lawless said.
The median house price in the harbour city is now $1,058,306, with a median apartment value of $774,124.
“Sydney’s housing market has become the most significant drag on the headline growth figures,” Mr Lawless said, with capital cities down 0.4 per cent on average over the month.
Melbourne also saw monthly declines, down 0.2 per cent. Its median house price is $832,735, with a median apartment price of $574,052.
The lacklustre results were expected to continue for both cities over 2018, which was “likely to be significantly different” to the boom cycle of the past few years, Mr Lawless said.
“We’re likely to see lower to negative growth rates across previously strong markets, more cautious buyers, and ongoing regulator vigilance of credit standards and investor activity,” he said.
The annual number of sales can drop by up to a quarter from peak to trough in a property cycle.
Mr Lawless expected to see regulators and policymakers encouraging highly indebted households to reduce their exposure while interest rates were low, and warned that future borrowers, particularly investors, “may find securing a mortgage won’t get any easier in 2018”.
Brisbane was flat over the month, Perth property prices declined 0.1 per cent, Adelaide and Canberra grew 0.2 per cent, while Hobart was the top performer with 1.2 per cent growth.
A tighter labour market was expected to help Queensland, Western Australia and South Australia, where house prices have been sluggish or falling for several years.
Over the year, all capital cities except Perth and Darwin recorded growth.
Hobart, Melbourne and Canberra had the strongest growth, up 12.3 per cent, 8.9 per cent and 4.9 per cent respectively.
Sydney recorded 3.1 per cent growth on an annual basis.
“While the headline figures are set to weaken, below the surface the individual cities and regions of Australia will continue to operate under their own distinct cycles which are subject to more localised forces of demand and supply,” Mr Lawless said.
High migration, particularly into Victoria and NSW, was likely to remain a key driver of housing demand.
Source: The Sydney Morning Herald