National property prices have fallen for the 12th consecutive month as a result of a “substantial drag-down effect” from declines in Sydney and Melbourne, according to the latest CoreLogic research.
CoreLogic’s latest Hedonic Home Value Index has revealed that national home values dropped by 0.5 of a percentage point in September, marking a 12-month decline of 2.7 per cent since prices peaked in September 2017.
The research also reported that combined capital city dwelling values fell by 0.6 of a percentage point in September and 3.7 per cent year-on-year.
The September decline in home values was sharpest in Melbourne (0.9 of a percentage point), followed by Sydney and Perth (0.6 of a percentage point), Darwin (0.4 of a percentage point) and Adelaide (0.2 of a percentage point).
Conversely, prices rose in Hobart (0.4 of a percentage point), Canberra (0.3 of a percentage point) and Brisbane (0.2 of a percentage point).
CoreLogic’s head of research, Tim Lawless, observed that on an annual basis, property prices in Sydney and Melbourne took the biggest hit.
“We’ve seen Sydney dwelling values drop by 6.1 per cent over the past 12 months and Melbourne values are 3.4 per cent lower,” Mr Lawless said.
“Not only are these among the largest annual falls across the capital cities, but considering Sydney and Melbourne comprise approximately 60 per cent of the national value of housing, the weak conditions in these cities have a substantial drag-down effect on the overall national housing market performance.”
Mr Lawless attributed the decline in property prices to tighter regulation of the banking system, adding that the financial services royal commission interim report could prompt further tightening.
“With the release of the banking commission interim report, there is a chance that already tight credit conditions could tighten even further,” Mr Lawless said.
“The constant theme from the report is that regulators should monitor and enforce existing policy much better, while lenders and brokers need to place client interests ahead of profits.
“This implies a more conservative lending approach going forward which is likely to impact further on credit availability.”
However, the research found that price growth across regional markets were stable over the year to September 2018. Despite a monthly fall of 0.2 of a percentage point, combined regional dwelling values increased by 1.2 per cent year-on-year.
Mr Lawless also made note of stronger market conditions across the “lower valuation quartile” in Australia’s capital cities, which he attributed to a “surge in first home buyer numbers”.
Further, the CoreLogic research reported that as of 30 September, the national median home value was $550,610, with the median value across Australia’s combined capital cities at $642,531, and across Australia’s combined regional markets at $368,441.