Australia’s property market is in the midst of a housing price correction but year-on-year declines in Melbourne and Sydney were less severe than expected, new analysis shows.
Realestate.com.au’s January 2019 Property Outlook report reveals conditions remain highly variable across the country, with most capital cities either stabilising or recording moderate growth for the year and December quarter.
Sydney had the largest median price fall year-on-year for December, with an annual change of -5.9%, followed by Darwin and Perth (both on -3.6%) and Melbourne (a mild 1.5% decline).
For the three months to December 2018, Sydney’s price dropped by 1%, followed by Darwin (-0.7%), Perth (-0.6%), Melbourne (-0.5%), and Canberra and Brisbane (both down by a minimal 0.2%).
Hobart, Canberra, Adelaide and Brisbane all bucked the trend with annual growth for 2018, rising year-on-year by 8.4%, 1.4%, 1.1% and 0.4% respectively.
Both Hobart and Adelaide continued this momentum with moderate growth of 0.7% and 0.6% in the December quarter.
Median price per capital city (as of December 2018)
- Adelaide: $437,511
- Brisbane: $490,000
- Canberra: $591,000
- Darwin: $440,000
- Hobart: $420,000
- Melbourne: $665,000
- Perth: $475,000
- Sydney: $840,000
Nerida Conisbee, realestate.com.au’s Chief Economist, says the national market is now “well and truly in the midst of a downturn”.
“Only four capital cities saw price increases in 2018, with the rest recording declines. Across regional Australia, conditions are even more variable,” Conisbee says.
“The realestate.com.au House Price Index is showing that declines are far less severe than what many other commentators are saying. There is no doubt we are seeing price declines in Melbourne and Sydney, but they are not as pronounced as first thought; and we are certainly not seeing the worst conditions in 30 years.”
However, Conisbee says Melbourne and Sydney are still expected to see price falls for the first half of the year, but the outcome of the Financial Services Royal Commission and the Federal Election will affect the market’s direction for the second half of 2019.
“At this stage, it is looking like restrictions on home loans will not be a big focus of the final (Royal Commission) report. It is unlikely it will get any tougher for home buyers looking to borrow,” she says.
“It is now likely we will see a change of Government sometime in the first half of 2019. While a more stable Government is good news for property, it is the potential changes to negative gearing and capital gains concessions that could continue to lead to price falls.”
Australia’s most popular suburbs
For the December 2018 quarter, the 10 most in-demand areas represented four states – Victoria, Tasmania, South Australia and New South Wales – with popularity determined by the number of views per listing on realestate.com.au.
Here were the most in-demand suburbs on-site for the three-month period:
- Middle Park, VIC – 6,058
- Battery Point, TAS – 5,923
- Aldgate, SA – 5,785
- Crafers West, SA – 5.658
- Collaroy Plateau, NSW – 5,580
- South Hobart, TAS – 5,460
- Belair, SA – 5,251
- East Geelong, VIC – 5,169
- Killarney Heights, NSW – 5,061
- Red Hill, VIC – 5,034
“The other sign that Melbourne is holding up a lot better is that we are seeing a number of Melbourne suburbs with very high views per listing. Middle Park and Red Hill are even making the national list, a position usually reserved for suburbs in strong performing markets,” Conisbee says.
“Regional Victoria is booming… Ballarat, Geelong and Latrobe Gippsland are currently the strongest regional areas in Australia.
“Adelaide is defying the odds. The city’s median has hit the highest level recorded and there is no region experiencing declines. There are also three suburbs featuring in the most in-demand in Australia – Crafters West, Aldgate and Belair, all in the Adelaide Hills.
“Last year, Hobart saw its first $1 million suburb, with Battery Point hitting $1.34 million… it was also the second most in-demand suburb in Australia, suggesting that this price growth will continue.”