Affordability improves in 2018
House prices were 10 per cent and 9 per cent lower over 2018 in Sydney and Melbourne respectively.
Unit prices were 6 per cent and 2 per cent lower in the same two cities.
Overall, dwelling prices at the national level were 5 per cent lower over the year with prices down sharply in the most expensive quartile (-8 per cent) and flat in the cheapest.
Perth's housing market had looked to be bottoming out, but has been clobbered anew by new mortgage lending rules along with the rest.
Brisbane, Adelaide, and Canberra recorded modest price growth in 2018, and Hobart topped the charts (click on the graphic to expand):
Source: CoreLogic
Gross yields in the largest two cities are off their cyclical lows, rising from about 3 per cent to 3½ per cent.
Yields on capital city real estate are of course low when compared to a 'risk free rate' of about 2.3 per cent, though of course you can't live in a 10-year government bond.
Housing is a unique asset class as both a consumption and investment good (for example, I'll always keep property in Sydney - the alternative if I decided to return is paying at least $50,000 per annum in rent, and probably $75,000 plus the way rents are good heading for terraces...no thanks!).
Source: CoreLogic
Apartment yields in Sydney (3.8 per cent), Melbourne (4.2 per cent), and Brisbane (5.3 per cent) are a little higher, though of course still historically low in an era of record low mortgage rates.
The slowdown has intensified in H2 2018, and has been driven mostly by difficulty in borrowing, not a lack of appetite for buying or a rush of vendors.
In fact new listings are now at by far the lowest level in 8 years despite the Australian population having increased very substantially by about 3 million over that period to 25.2 million.
State budgets in New South Wales and Victoria will need to be rewritten to account for the enormous hole that has been punched in stamp duty and transfer receipts.
The wrap
Clearly no rush for the exits then, but some markets will always fare worse than others, and it's not to say there aren't pockets of intense pain, mainly in the most supply-responsive markets.
The wrap
Clearly no rush for the exits then, but some markets will always fare worse than others, and it's not to say there aren't pockets of intense pain, mainly in the most supply-responsive markets.
Ask owners in Sydney's Epping (-18 per cent) about their calendar year and they might not be so keen on the 'orderly slowdown' narrative.
At the sub-regional level the Sydney results for 2018 were pulled down by Ryde (-13 per cent), Sutherland (-11 per cent), Hawkesbury & Baulkham Hills (-11 per cent), Parramatta (-11 per cent), and the South West (-9 per cent), while Melbourne's inner east (-13 per cent) also suffered significantly.
While regional prices were flat overall, the best performers included Launceston, Geelong, and Ballarat.
Investor credit growth now at the lowest level on record despite the high rate of apartment completions.
The growth in owner-occupier loans is also now at multi-year lows.
Accordingly tomorrow's lead article in The Australian will report Treasurer Frydenberg demanding that banks open their loan books to provide timely and affordable access to home loans, to avoid the risk of a prolonged downturn threatening the economy.
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One fortunate feature of the Australian economy is the way in which the Aussie dollar has tended to respond to risk sentiment and global slowdown fears.
The Aussie dollar has just fallen to 69.8 cents to sit below 70 US cents for the first time in two years, which won't hurt.
The growth in owner-occupier loans is also now at multi-year lows.
Accordingly tomorrow's lead article in The Australian will report Treasurer Frydenberg demanding that banks open their loan books to provide timely and affordable access to home loans, to avoid the risk of a prolonged downturn threatening the economy.
---
One fortunate feature of the Australian economy is the way in which the Aussie dollar has tended to respond to risk sentiment and global slowdown fears.
The Aussie dollar has just fallen to 69.8 cents to sit below 70 US cents for the first time in two years, which won't hurt.
