Continual growth in dwelling values across Australia’s regional markets has offset a “broader” decline nationally, but values for the year to May have dropped for the first time since 2012, according to CoreLogic.
CoreLogic’s Hedonic Home Value Index has revealed that national home prices fell by 0.1 per cent in the month of May, driven by a drop in dwelling values across the nation’s capital cities.
Home values fell sharpest in Melbourne (0.5 per cent), followed by Sydney and Canberra (0.2 per cent), and Perth and Darwin (0.1 per cent).
Despite a 0.8 per cent price growth in Hobart, a 0.5 per cent rise in Adelaide and a 0.2 per cent jump in Brisbane, combined capital city dwelling values slipped by 0.2 per cent in May.
Monthly figures across the country
“The negative headline growth rate is a symptom of weakening housing conditions across the capital cities, led by Melbourne and Sydney where previously, capital gains were nation-leading,” CoreLogic head of research Tim Lawless said.
“Sydney and Melbourne comprise approximately 60 per cent of Australia’s housing market by value, and 40 per cent by number, so the performance of these two cities has a larger effect on the headline market performance.”
However, Mr Lawless noted that the decline in headline market performance was offset by continual growth in home values across the country’s regional markets.
CoreLogic’s data revealed that combined regional market dwelling values increased by 0.2 per cent in May, 1.1 per cent over the past quarter and 2.2 per cent year-on-year.
Geelong, Victoria, led the charge in the regional market value rise (10.2 per cent), followed by South-Eastern Tasmania (8.0 per cent), NSW’s Southern Highlands and Shoalhaven regions (6.8 per cent), NSW’s Central West (6.7 per cent), and Launceston and South-Eastern Tasmania (6.6 per cent).
“The combined regional markets have helped to offset a broader decline, with dwelling values consistently rising, albeit at a much lower pace relative to the growth seen in Sydney and Melbourne over the previous growth phase,” Mr Lawless added.
“Dwelling values outside of the capital cities nudged 0.2 per cent higher over the month to reach a new record high in May.”
First annual decline since 2012
The national median home value now sits at $555,274, with the combined capital city median home value at $654,710 and the combined regional market median home value at $365,792.
Despite the monthly figures only showing a marginal change, CoreLogic highlighted that the year to 31 May saw the first drop in annual values in six years.
The analysts said: “Australian dwelling values slipped by 0.1 per cent lower in May, taking the annual change (-0.4 per cent) into negative territory for the first time since October 2012.
“In a sign the housing market downturn is becoming more entrenched, May marked the eighth consecutive month-on-month fall since the national market peaked in September last year, taking the cumulative fall in dwelling values to 1.1 per cent through to the end of May 2018. Similar to the current softening in housing market conditions, the previous downturn, which ran briefly from late 2015 to early 2016, was also driven by tighter credit conditions.
“It lasted for only five months nationally, with national dwelling values falling by 97 basis points before surging higher again on the back of two 25 basis point cuts to the cash rate which led to a rebound in housing credit growth.”
[Related: Dwelling approvals slip by 5% in April]