Last month we saw CoreLogic national index move through the tenth of falling home values.
Since peaking in September last year, thev Australian housing market has recorded a cumulative 1.9% fall in value; a relatively mild downturn to date, especially when you consider that values remain 31% higher than they were five years ago.
The month of July saw the housing downturn gathering some momentum; on a national basis, the 0.6% month on month fall was the largest decline since September 2011 and the rolling quarterly change, at -0.9%, hasn`t been this low since since January 2012.
Five of the eight capital cities saw values slip lower over the past three months and trends across the regional housing markets, where conditions have generally been more resilient to falls, have also turned negative.
The weakness in dwelling values is being driven by the long running declines in Perth and Darwin along with an acceleration in the rate of decline across Sydney and Melbourne.
Outside of these cities, growth rates are generally slowing as tighter credit conditions broadly dampen housing market activity.
Across the capital cities, Melbourne has been leading the downturn, with the quarterly rate of decline outpacing sydney since May this year.
Melbourne dwelling values were down 1.8% over the past three months, followed by Perh at -1.5% and Sydney where the market was down -1.1%.
Melbourne`s decline phase commenced five months later than Sydney`s, with the market peaking in November last year.
Since that time, Melbourne dwelling values have fallen by 2.9%, while in Sydney, where values peaked twelve months ago, the market is down 5.4%.
Those cities where values continue to trend higher have also seen a sharp reduction in their rate of capital gain.
In Brisbane and Adelaide, where housing values were rising at a more sustainable pace over the past five years, the annual rate of capital gains has weakened.
In Brisbane, the annual rate of growth has eased from 2.9% a year ago to 1.2% over the past twelve months and in Adelaide the annual growth rate has dropped from 5.4% a year ago to just 0.7% over the most recent twelve month period.
Even the Hobart market, where the annual pace of capital gains has held in double digit growth territory since January 2017, is starting to slow down.
Dwelling values were steady over the month and the annual rate of growth slowed to 11.5%; still strong but the slowest annual growth rate since February 2017.
Over the past three months, Hobart dwelling values have increased by just 1.1% which is their slowest rate of increase over a three month period since July 2016.
Focusing on the regional markets
Dwelling values were down 0.2% across the combined regionals index over the three months ending July, driven by falls across regional NSW where the market was 0.2% lower.
Values were also down -0.6% across regional Qld and regional WA which recorded the largest dicline over the quarter, down -3.5%.
While three of the seven «rest of state» regions saw a fall in values over the three month period, the pace of growth across the remaining regional areas has clearly decelerated, contributing to the overall softer national result.
Settled sales numbers highlight the market weakness, with the number of dwelling sales falling by almost 10% over the twelve months ending July 2018.
Every capital city except Adelaide has seen a reduction in the number of settled sales, with the largest annual declines recorded in Sydney and Melbourne, where sales over the past twelve months were down 17% and 15% respectively.
As activity in the market slows, inventory levels have risen and vendors have lost some leverage.
Total advertised stock levels are almost 8% higher than a year ago, reaching the highest level for this time of the year since 2012.
With more properties to choose from, buyers are negotiating harder resulting in higher vendor discounting rates and longer selling times for private treaty sales.
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