Home values slide in 2018
When I last appeared on the Business Insider podcast back in May I noted that Sydney houses seemed to be transacting at prices roughly 10 per cent lower than at their frenzied peak period of early 2017.
I've no clue how my smattering of anecdotes translate into a hedonic home value market index, to be honest, but CoreLogic's monthly result does now show median house prices 9 per cent lower year-on-year for Sydney, and apartments in the harbour city down 5½ per cent to a median value of of $721,265.
At a macro level, that seems to make some sense.
The weakest sub-regions in Sydney, perhaps unsurprisingly, included supply-responsive Ryde (-12 per cent), Sutherland (-11 per cent), Parramatta (-10 per cent), and the inner south-west (-9 per cent).
And therein, the premium end of the market, which tends to be the most volatile, has driven the bulk of the price falls to date.
In Melbourne house prices are down 7½ per cent from a year earlier, with price changes elsewhere relatively modest (booming Hobart excepted).
Nationally home values over the year-to-date are down by -3.8 per cent.
Nationally home values over the year-to-date are down by -3.8 per cent.
Source: CoreLogic
The strongest performing regional markets over the past year have been Geelong and Launceston, with price growth of about 10 to 12 per cent respectively.
You can pick out your favourite property types and cities by expanding the graphic above.
Yields now rising
Very few properties are now selling at auction in Sydney, according to on-the-ground intel, with auction sales volumes down by ~75 per cent and many buyers struggling to arrange their finance in time for the tail end of the auction campaigns.
'A-grade' properties are certainly still transacting, but even the buyers that are pre-approved for finance are reluctant to make unconditional offers in the twitchy prevailing environment.
One final observation: I've noted in reports elsewhere that if the ALP goes on to win the election and successfully rams through its proposed changes to negative gearing and capital gains tax, one way or another rental yields in Sydney and Melbourne would probably have to rise by about 1 per cent (other things being equal, that is, including mortgage rates).
Interestingly with the macroprudential changes implemented this shift is already well underway with gross rental yields in the largest cities heading back up from a very skinny 3 per cent to about 3½ per cent, albeit as a function of lower prices rather than rising rents to date.
Source: CoreLogic
The downturn in dwelling prices and construction seems almost certain to eliminate the prospect of a higher cash rate in 2019, if that even ever was on the table.
The TD monthly inflation gauge came in at zero for November, and only 1.6 per cent year-on-year.
CoreLogic noted that the downturn has largely been confined to Sydney and Melbourne, with the strongest capital city markets being Hobart, Canberra, and parts of Brisbane and Adelaide.
The cost of debt remains the lowest since the 1960s, noted CoreLogic, but credit conditions remain very tight.
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Some lighter-hearted and 'behind the scenes' shots from BI Live.
Panel.
'Green room' - Cameron Kusher, Stephen Koukoulas, Joanne Masters.
...and Con.
