Sydney Home Prices Have Biggest Quarterly Drop in Four YearsBy
December prices fall for second consecutive month in Sydney
CoreLogic sees further declines in home prices in 2016
Sydney home prices fell for the second-consecutive month and recorded the worst quarter in four years as a regulatory crackdown pushed up mortgage rates and dented affordability amid record prices.
Home values in Australia’s largest city dropped 1.2 percent in December from a month earlier following a 1.4 percent decline in the previous month, data from property researcher CoreLogic Inc. showed Monday. This is the first time since May 2013 that Sydney dwelling values have dropped for two straight months.
Prices in Australia’s capital cities have jumped almost 55 percent in the past seven years as mortgage rates dropped to five-decade lows and foreigners, including from China, accelerated their purchases of local homes. The gain was led by Sydney where the median home value has almost doubled since 2008. In another sign of a cooling property market in Australia’s most populous city, Sydney home prices fell 2.3 percent in the quarter ended Dec. 31, making it the weakest performing capital city, CoreLogic said in an e-mailed statement.
“Throughout 2016, we may see further moderate value declines in Sydney and Melbourne,” Tim Lawless, head of research at CoreLogic, said in the statement. “However, considering population growth has remained strong in these areas and economic conditions are very healthy in these cities, we would be surprised if dwelling values fell materially before conditions start to level.”
Melbourne prices dropped 1.9 percent in the quarter despite a 1 percent increase last month, according to the data. Values dropped 1.4 percent on average in the quarter across all the capital cities with only Brisbane and Adelaide bucking the trend.
Prices climbed 7.8 percent across the country in 2015, with Sydney leading with an 11.5 percent gain on the back of a surge in the first 10 months of 2015, the data show.
The trend reversed after banks raised interest rates for landlords for the first time in five years in July and for owner occupiers in November following a regulatory directive to limit growth in investor mortgages to 10 percent a year and increase the capital the lenders hold against mortgages.
Economists from Macquarie Group Ltd. to Bank of America Merrill Lynch forecast a decline in prices over the next two years. Australia & New Zealand Banking Group Ltd. said in a note Nov. 30 “strong underlying demand” is likely to contain any price declines in the major capital cities to less than 10 percent in the absence of an economic downturn.
Australian investor mortgage growth fell to a 17 month low of 9.1 percent in the 12 months to Nov. 30, Reserve Bank of Australia data showed last week. Growth in lending to landlords has eased and supervisory measures are helping to contain risks that may arise from the housing market, RBA Governor Glenn Stevens said in a statement Dec. 1 when the central bank kept its benchmark rate unchanged at a record low of 2 percent.
Sydney’s median dwelling price stood at A$800,000 ($583,000) in December compared with A$610,000 for Melbourne and A$595,000 for the combined capital cities.
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