According to Domain, house prices fell in every capital city this quarter, except for Melbourne and Hobart, where prices rose by 1.2 per cent and 4.3 per cent, respectively.
Apartment median prices fell in every capital city following a record number of apartments being built in most capitals.
The media is full of stories gloating that Sydney median house prices have dropped below $1 million for the first time in a year, not surprisingly this is allowing some of the property pessimists to rub their hands in glee saying “I told you so.”
Source: Domain House Price Report
Sure our property markets are experiencing a slowdown, and yes prices are falling a little in some locations, however we’re not in for a property crash.
What’s going on in Sydney?
This quarter’s decline comes after the Sydney housing market saw a fall in house prices of 3% over the December quarter.
Yet Sydney house prices remain up 6.9% year on year.
Domain Group chief economist Dr. Andrew Wilson said:
“It’s a hangover from the party of prices growth Sydney had over the past three years.
We’re entering a new environment of low and modest growth, but there’s no sign of a strong fall … Sydney is seeing a natural moderation of prices due to the de-camping of investors ….
And there’s every likelihood that we’ll get another drop in June given that auction clearance rates are moderating, banks are tightening their lending rules and buyers and sellers are going to be distracted by an election.”
Dr Wilson points out, the most recent drop is less than the one in December.
So there could be an even smaller fall in June.
While Sydney’s boom is over, no property crash is imminent.
The underlying strong fundamentals have not changed.
It’s not as if there’s been any major trigger to substantiate a more significant correction, like a large rise in interest rates or a jump in unemployment.
Dr. Wilson expects the Sydney market to pick up in the second half of this year.
It’s a different story in Melbourne.
Melbourne’s property market experienced annual price growth of 11.8%.
Dr. Wilson said the Melbourne market was gradually deflating – as opposed to correcting – which had previously occurred with higher interest rates or when unemployment rose and incomes fell.
The city was now in a period of more sustainable prices growth, he said, and the March quarter increase may be the peak for this year.
“Clearance rates continue to hold above 75 per cent and the market was “ticking all the boxes” with an improving local economy, strong migration and significant interest from international buyers,”
House prices across Brisbane fell marginally by 0.05% and unit prices fell by 0.8% per cent, according to theMarch quarter Domain House Price Report .
Domain Chief Economist Andrew Wilson says there were expectations of healthy growth for 2016, but at best the Brisbane market can only hope to match last year’s growth of 4 per cent.
“Brisbane tends to start the year a little slowly, but there were expectations of improvement this year,” he said.
“At best, the market held the line, but it’s disappointing in terms of expectations.”
The other states