House prices plummet at fastest rate since GFC

Lloyd Doyle
December 5, 2018

Sydney property values have fallen 9.5 percent since they peaked in July of previous year, according to the latest figures from property-information group CoreLogic.

Sydney's property downturn accelerated in November, propelling nationwide house prices to the biggest monthly drop since the global financial crisis, as credit curbs and buyer nerves continue to bite.

The city's largest downturn on record was in the recession between 1989 and 1991 and Lawless says it is likely that Sydney will "set a new record in terms of the magnitude of price decline and the length of decline".

Melbourne's property price falls have been less precipitous so far, with values down 1 per cent last month, and 5.8 per cent peak to trough.

Sydney's drop was double the national average, and Melbourne values fell 1.0 per cent.

He said, "Additionally, housing affordability constraints are more pronounced in these markets and rental yields are substantially lower, indicating an imbalance between rental values and dwelling values".

Rental markets continue to be sluggish, with national rents up by only 0.7 per cent of the past 12 months.


"The tightening in finance conditions has been more pronounced across the investor segment of the market, where Sydney and Melbourne have recorded much higher concentrations of investment demand", he said.

Although the weaker housing market conditions in Sydney and Melbourne are under the spotlight, Tim Lawless said, "Conditions across the Australian housing market are increasingly diverse".

"I think any turnaround in the housing market is very much reliant on credit becoming a bit more available and, potentially, when we do start to see credit loosening up a little bit, that might be a sign that potentially monetary policy [interest rates] might be adjusted upwards as well".

The good news in light of this statistic is that Australia now has record lows when it comes to interest rates, with unemployment hovering around the 5% mark, and general economic growth occurring.

"Despite the recent out-of-cycle 15 basis point rise in mortgage rates, the cost of debt remains at the lowest level since the 1960s", he said.

"The factors should help to support housing demand and offset a more material decline in dwelling values".

This story first appeared in Business Insider.

Other reports by Iphone Fresh

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