National home values have fallen for the ninth consecutive month, with tighter lending conditions and the slowdown in investment activity cited as the “primary drivers” of the housing market slump in the latest CoreLogic report.
According to CoreLogic’s latest Hedonic Home Value Index, dwelling values slipped by 0.2 of a percentage point in June, driven by a 0.3 of a percentage point slide in combined capital city home prices. National home values have now dropped by 1.3 per cent since the price peak at September 2017.
The sharpest reported fall was in Darwin (1.1 per cent), followed by Perth (0.5 of a percentage point), Melbourne (0.4 of a percentage point), and Sydney and Canberra (0.3 of a percentage point).
Home values increased, however, in Hobart (0.3 of a percentage point), Adelaide (0.3 of a percentage point) and Brisbane (0.2 of a percentage point).
CoreLogic’s director of research, Tim Lawless, attributed the continual fall to tighter credit conditions, which he expects to persist.
“Tighter finance conditions and less investment activity have been the primary drivers of weaker housing market conditions, and we don’t see either of these factors relaxing over the second half of 2018, despite [the Australian Prudential Regulation Authority’s] 10 per cent investment speed limit being lifted this month,” Mr Lawless said.
Mr Lawless also noted the impact of greater scrutiny over income and expense information provided by borrowers, claiming that the tightening of such criteria has limited borrower capacity in markets with elevated home values.
“With lenders now focusing more on overall debt-to-income ratios and household living expenses, housing markets where prices are high relative to incomes could see less activity as prospective buyers find their borrowing capacity reduced,” Mr Lawless continued.
Further, the CoreLogic research director claimed that with the federal election looming, the Labor opposition’s proposed changes to negative gearing could further reduce investor activity.
The research revealed that in June, home values across Australia’s regional markets remained stable, and according to Mr Lawless, could be easing, after consistent growth over the past quarter (0.6 of a percentage point).
“Markets such as Geelong, the Capital Region and Ballarat have each benefitted from a spillover of demand emanating from the more expensive and often more congested metropolitan areas of Melbourne and Canberra,” the research director said.
“Areas adjacent to Sydney have also seen market conditions benefit from this ripple of demand; however, conditions are now generally easing.”
The national median home value now sits at $556,384, with the combined capital city home value at $654,366 and the combined regional market home value at $367,135.