Are Australian house prices falling?

With house prices throwing up mixed results, we asked the experts for a property market update.

A tale of two (or more) markets is beginning to emerge when it comes to Australian house prices. In some places prices are falling, while in other locations, prices are on the up. 

Read on as we provide a property market update and explain what’s happening where you live, and why.

Sydney, Melbourne and Adelaide 

According to property analytics group Core Logic, prices in both Sydney and Adelaide were down 0.3% for the month of March, while prices in Melbourne fell 0.2%1

These three cities all recorded negative growth for the first three months of 2018, with Sydney prices down the most at 1.7%, followed by Melbourne (down 0.5%) and then Adelaide (down 0.4%)2.

AMP Capital’s Head of Investment Strategy and Economics and Chief Economist Dr Shane Oliver says Sydney and Melbourne property prices are likely to fall another 5% or so this year, while he expects prices in Adelaide to experience some moderate growth. 

Hobart 

By contrast, the southern-most capital is experiencing something of a boom, with Hobart house prices up 1.7% for the month of March, bring total growth for the first quarter of the year to 3.4%3.  

And further good news lies ahead if you’re a property owner in Hobart, as Shane says “the boom in Hobart has a way to go yet”.

Brisbane

The market in Brisbane remains largely static, with a small (0.1%) rise in March but overall, no change in prices was recorded over the first three months of 20184

Shane is forecasting moderate price growth lies ahead for Brisbane, although he says that “at some point it may start to experience a pick up as Queensland’s population growth is starting to perk up”.

Darwin, Perth and Canberra 

Darwin, Perth and Canberra all saw prices rise in March when compared to February, with Darwin up 1%, Perth up 0.3% and Canberra up 0.2% for the month, but all three markets were down overall for the first quarter of the year, with Darwin down 0.1%, and Perth and Canberra both down 0.2%5

Shane says home prices in Perth and Darwin are either at, or close to, their bottom, while price growth is likely to be moderate in Canberra. 

Regional areas v capital cities

Taken as a whole, the combined capital cities markets fell 0.2% in March, but regional locations are performing better – when combined, regional markets saw prices rise by 0.4% in March6

Head of research at CoreLogic, Tim Lawless says regional markets are now consistently outperforming the combined capitals. 

“The stronger combined regional markets performance continues a trend that began to emerge in October last year where regional housing markets showed an overall improvement in the pace of capital gains while the combined capitals trend softened.” 

For more detail about property prices outside the major cities, check out our article: Where to buy property in regional Australia.  

What’s driving the market movements?

Shane says that a combination of factors is behind the falls in the Sydney and Melbourne markets, including: 

  • Investors and those looking for interest-only loans finding it more difficult to get finance, as banks have tightened their lending criteria due to pressure from regulators, 
  • Tougher restrictions being imposed on foreign buyers by the government, 
  • Rising levels of housing supply, and
  • Buyers with more realistic price expectations.  

However, he maintains talk of a property crash has been overdone. 

“With population growth remaining strong, a property crash remains unlikely in the absence of much higher interest rates, much higher unemployment  - both of which are unlikely - or a continuing surge in supply.”

How we can help

If you’re looking to take advantage of market conditions to get into the property market or make your next move, check out our range of competitive home loans, or speak to your financial adviser to get help plotting your course. If you don’t have an adviser, our online search tool can help you find one in your local area. 

1-6 Core Logic, Hedonic Home Value Index, March 2018. 

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