House prices in Melbourne fall at the fastest quarterly rate ever as Sydney enters a new territory

Real estate prices in Melbourne have fallen at their fastest quarterly pace ever, due to tightening credit conditions and gloom before the release of the Royal Commission's final investigation report. the banks next week.

CoreLogic's Australia figures, released on Friday, show that national housing values ​​fell by another 1% in January, bringing the cumulative decline to 6.1% since the global market peaked in November. October 2017.

The January declines – although traditionally a difficult month due to the low level of activity – continue the trajectory of the real estate market from 2018, which has experienced the lowest conditions since the GFC.

Sydney and Melbourne posted respective declines of 1.3% and 1.6% for the month, bringing their quarterly slippage down to 4.5% and 4% and their annual decline to 9.7% and 8.3% respectively. %.

The capitals of New South Wales and the Victorian state are now down 12.3% and 8.7% from their respective peaks in July and November 2017, as values ​​in these cities have now returned at their most recent levels observed in July 2016 and January 2017.

"If you'd asked me this question last September, I'd probably have been surprised to see the values ​​of Sydney and Melbourne drop by more than 4% over a slippery quarter," said Tim Lawless, manager. research at CoreLogic.

"We have seen an acceleration in the slowdown over the past three months, with Melbourne's fastest rate of decline in three months at 4%, and Sydney virtually (the fastest outside). a brief period in the 80s ".

The total decline in Sydney is now the worst since the research firm began collecting records in 1980, after eclipsing the previous record of 9.6% set between 1989 and 1991. The worst fall in Melbourne around the same period was 10%.

"The market is down 8.7%, it does not have much to do and my badumption is that we will see Melbourne set a new benchmark for the magnitude of the decline," he said. declared. "Sydney is clearly on a new territory."

Lawless said that the weakness of Sydney and Melbourne, which together account for about half of the value of the Australian housing market, is compounded by that of other cities, which are also beginning to feel the effects .

"The values ​​(in these areas) continue to increase, but they are also slowing down," he said. "I think we can clearly point to a credit crunch and credit granting conditions that will dampen the market."

Unlike previous slowdowns, which generally coincide with a sharp rise in mortgage rates, this slowdown occurs against a backdrop of relatively strong economic conditions, decent employment growth and low interest rates.

"In any case, it's a consolation," said Lawless. "The RBA can bring down rates, there can be a risk, people have a job and are able to repay their mortgages.In that sense, the downturn is manageable."

He conceded that "we are witnessing a destruction of wealth". CoreLogic now expects total declines of 18 to 20 percent in Sydney and Melbourne, but notes that this follows price increases by nearly 80 percent and 60 percent respectively.

"Most homeowners would still have a lot of equity in their properties," he said. "It's really only the owners who have bought these last two years that are facing negative equity prospects."

The median value at the end of January in Sydney was 795,509 USD, 636,048 USD in Melbourne, 494,345 USD in Brisbane, 430,711 USD in Adelaide, 441,920 USD in Perth, 457,785 USD in Hobart, 59,129,40 USD in Canberra. The national median was $ 528,553.

All capitals recorded declines except Canberra, which saw its values ​​rise by 0.2%. Brisbane and Adelaide dropped 0.3%, Perth 1.1%, Hobart 0.2% and Darwin 1.7%.

The most expensive part of the market suffers the biggest falls. In Melbourne, the top quarter has fallen 12.4% in the last 12 months and 13.8% since the peak. In Sydney, these numbers are 10.8% and 14.6%.

CoreLogic said the year had started with fewer new listings and the properties being put up for sale continued to climb. Compared to last year, new listings in January were down 13% and total announced inventories nearly 16%.

It's a buyer's market because tough sales conditions are forcing more and more suppliers to offer discounts. CoreLogic said that vendor rebates in the combined capitals had reached a median level of 6.1% in the quarter, compared to 4.7% in the same period last year.

Meanwhile, the median selling time has gone up to 37 days 44 days ago, up from 37 days ago. Sales settled in the 12 months to January 2019 decreased 12.3% from the previous year.

CoreLogic will resume the publication of auction results next week, but said that he was not expecting a reversal of the downward trend, which caused the clearance rates to fall to 40% in December.