Sydney property values have now fallen 9.5 per cent since they peaked in July last year and will likely surpass the largest downturn on record, according to CoreLogic’s head of research Tim Lawless.
The slide in prices accelerated in November, with national dwelling values falling 0.7 per cent, the weakest monthly result since the global financial crisis, led by a 1.4 per cent decline in Sydney and a 1 per cent drop in Melbourne, CoreLogic’s latest home value index showed.
“For Sydney, 1.4 per cent is the biggest monthly fall we’ve seen so far this downturn. The last time we saw a bigger monthly fall was back in 2004 but that was only one month and otherwise you’d have to go back to 1989 to see values falling faster than this,” Mr Lawless said.
“If you look at Sydney’s largest downturn on record it was 9.6 per cent during the recession between 1989 and 1991. It’s likely Sydney will set a new record in terms of the magnitude of price decline and the length of decline,” Mr Lawless said.
Mr Lawless said the latest figures weren’t too surprising. “Normally through November and into early summer we find listing numbers ramp up and we’re seeing a lot of stock available in Sydney and Melbourne so there is a lot more choice for buyers and buyer levels are thin.”
Nationally, property prices dropped 4.1 per cent over the year – back to the same level as December 2016 – with Sydney prices sinking 8.1 per cent annually, Melbourne values falling 5.8 per cent, and Perth experiencing a 4.2 per cent decline.
A tighter lending environment, sparked by an initial regulatory intervention by the prudential regulator and perpetuated by banks’ stricter assessment of borrowers and their living expenses, is having a clear effect on prices.
Investor home loans grew at their slowest annual pace on record last month, while owner-occupier loan growth hit a three-year low, according to last week’s Reserve Bank of Australia figures.
Mr Lawless said while Melbourne had “stronger fundamentals on paper”, such as strong population growth and less of a challenge around housing affordability, he expected property prices to continue to fall in line with Sydney, as it was also exposed to high investor demand.
“We don’t see any factors that will turn around this market place within at least the next six months,” Mr Lawless said.
“We’re not expecting housing finance to relax and consumer sentiment will likely remain weak plus we’ve got an election next year so there are plenty of factors that will continue to dampen the market,” he said.
Over the month, prices grew 0.7 per cent in Hobart and 0.6 per cent in Canberra.
“Hobart was very much being driven by lifestyle factors, improving population growth and investor growth, but the growth rate is clearly slowing down,” Mr Lawless said.
Meanwhile Canberra prices had been driven by strong wages growth in the public sector, he said.
“Canberra will hold quite steady in terms of values rising a bit higher than the rate of inflation. Volumes are reasonably strong and we’re seeing plenty of buyer activity.”