One year makes all the difference when it comes to turning a housing boom into a housing slide.
CoreLogic data showed Australian prices ended the year down 6.1 per cent, and down 1.3 per cent in just December.
If you go by all the hot air that’s circulating, Sydney and Melbourne are the epicentre of the whack to prices, with prices down 8.9 per cent and 7.0 per cent for the year respectively.
But it’s not just Sydney and Melbourne that have been hit.
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CoreLogic data shows that in the final months of what was 2018, prices in Darwin, Perth and Brisbane all started to tip from up to down. Price increases in Hobart and to a lesser extent Canberra — which have grabbed headlines — have slowed or stopped entirely.
CoreLogic’s Cameron Kusher told news.com.au the outsized influence of Sydney and Melbourne in the property market — making up almost half of all sales — heavily influenced national prices.
He said even moving outside these markets, the story was similar, with prices falling, or price rises slowing significantly as buyers wait for continued falls amid issues of access to finance.
“You will start to see that the weakening in Sydney and Melbourne filtering into the lower price points,” he said.
REA Group chief economist Nerida Conisbee took a different tone when she spoke to news.com.au, saying she expected Melbourne house prices to remain stable and some property to perform well in 2019.
“We’re seeing the top end is doing quite well,” she said, “this is different from what CoreLogic is seeing.”
Conisbee said in Sydney the market seems to be diverging between premium property and affordable property, while those in the middle which were neither cheap nor particularly attractive were suffering the most.
Kusher said although housing markets differed between cities, a giveaway to watch was the movement of different parts of the market.
Restrictions on lending by the big banks in response to their collective humiliation before the Royal Commission has come in for significant attention in recent weeks, pointed to by many as the root cause of price falls.
Treasurer Josh Frydenberg recently implored the banks to lend more after APRA relaxed restrictions on investor lending.
“My message to the banks is still very clear — keep the books open. You have a social and economic responsibility to do so. It’s in the economy’s interests and the public’s interests,” he said.
But Kusher rejected this, saying price falls were due to more than tighter lending.
“One of the big myths is that this has all been caused by banks being forced to write legal home loans,” he said.
“APRA introduced these policies because they found areas where standards could be improved.”
But Propertyology managing director Simon Pressley said the tightening of credit was “very significant” saying it had put a “5-7 per cent drag on property prices”.
However, he did admit even without the tightening of credit, prices in Sydney and Melbourne would have “declined 2-3 per cent”.
Conisbee said tightening of credit wasn’t the only factor, but instead added to multiple blows that took confidence out of the market.
“When prices started to fall the (media) coverage started to cause fear in the market that things were tough and were going to get tougher,” she said.
“We know that any increase in financing cost does have an impact on sentiment, but it wasn’t just one thing.”
- news.com.au
