The national median house price has fallen for two consecutive quarters for the first time in almost five years.
Data from real estate marketing company Domain show a 0.5 per cent decline in the national median house price in the March quarter, backing up a December fall.
The last time there were two consecutive negative quarters was June 2011, in the midst of a mild national housing slump at the end of a Reserve Bank rate rise cycle that had taken the cash rate to 4.75 per cent.
Compare that to the current cash rate at a record low of 2 per cent, where it has been for almost a year, and from which it looks more likely to fall than rise over the near term.
The only cities to record quarterly house prices rises were Melbourne (1.2 per cent) and Hobart (4.3 per cent), while the worst quarterly falls were Darwin (-4.9 per cent) and Sydney (1.5 per cent).
Unit prices fared even worse, with no city posting increases – Adelaide’s flat result was the strongest.
While Hobart’s median house price was up, its typical unit price had the biggest fall of 6.2 per cent.
Darwin and Perth also had substantial unit price falls of 4.1 and 3.7 per cent respectively over the quarter.
A large number of property analysts have been warning for some time about unit price falls across many capital cities due to an apartment building boom that has led to a glut in many inner-city areas in particular.
The news for property owners was better over the past year, with house prices still up 6.2 per cent on a year ago, and unit prices 3.4 per cent higher.
Domain’s chief economist, Dr Andrew Wilson, was relatively upbeat despite the recent slowdown, expecting modest price growth this year.
“The outlook for house prices remains subdued with capital city growth, likely to continue to track at best just above the inflation rate for the remainder of 2016,” he noted in the report.
“The prospect of weaker house price growth, however, will be welcomed by prospective first home buyers still struggling to get into the market.”
Reduction in foreign buyers may be weighing on prices
A separate National Australia Bank study highlighted one potential factor in the price declines, with survey respondents reporting a drop-off in foreign buyer interest.
NAB’s first quarter residential property survey estimated that foreign buyers made up just under 12 per cent of the newly built market, a two-and-a-half-year low.
The biggest falls in interest were reported in Victoria (now 10.7 per cent of the market), News South Wales (11.1 per cent) and Western Australia (2.9 per cent), although foreign buyers reportedly bought up more than a fifth of newly constructed homes in Queensland.
Foreign interest fell for established homes as well, possibly coinciding with tougher penalties and enforcement in the sector commencing in December – only those who are resident in Australia are allowed to buy an established property, and it must be sold if they are no longer living in it as their primary residence.
Overseas buyers made up 7.2 per cent of sales, down from an estimated 8.6 per cent the previous quarter.
The NAB survey of developers, agents, fund managers and owners/investors did reveal an uptick in sentiment towards housing, rising from +1 to +6.
That has prompted NAB to lift its house price forecast for 2016 to growth of 1.5 per cent, but the bank expects unit prices to decline 1 per cent this year.