Photographer: Brendon Thorne/Bloomberg
Australian Home Prices Fell in Final 3 Months of 2017By
Sydney market continues to cool, declining 2.1% in quarter
Expect softer housing conditions in year ahead, CoreLogic says
Australian home prices fell in the final three months of 2017, the first such decline in almost two years, as the nation’s biggest market Sydney continued to cool.
Values nationally declined 0.3 percent in three months to Dec. 31, the first such drop since the period ending April 2016, according to CoreLogic Inc. data released Tuesday. Prices in Sydney dropped 2.1 percent in the quarter, dragging the city’s annual growth rate to 3.1 percent from 17.1 percent just seven months ago.
“Sydney’s housing market has become the most significant drag on the headline growth figures,” said Tim Lawless, CoreLogic’s head of research.
The once red-hot Sydney market is cooling after regulators clamped down on interest-only mortgages typically favored by investors. Rising state taxes have also made housing more expensive for foreign buyers. CoreLogic said it sees softer conditions throughout 2018, driven by the slowdown in Sydney and to a lesser extent, Melbourne.
Melbourne home values fell by 0.2 percent in December, the first monthly drop since February 2016, paring the quarterly gain to 0.9 percent, the data show. The market in the nation’s second-biggest city is more resilient due to stronger population gains, a higher rate of jobs growth and better affordability, according to CoreLogic.
Values fell a combined 0.5 percent across the state and territory capitals during the quarter, including a 2.9 percent drop in Darwin. Hobart, the state capital of Tasmania, was the best-performing market with a 3.1 percent gain.
Shane Oliver, chief economist at AMP Capital, said prices in Sydney and Melbourne could fall by around 5 percent this year.
“Still, low interest rates and support for first home buyers are providing some support and should help ensure only moderate price falls,” Oliver said.