House price pain persists

Sydney, Melbourne markets tipped for tough year

THE pain doesn’t look over for Australia’s big-city housing markets.

Prices in Sydney and Melbourne are tipped to continue to decline in 2019.

Dwelling values are predicted to fall 3.3 per cent in Sydney and by as much as 6 per cent in Melbourne on the back of declines in inner-city areas, according to yesterday’s Fourth Quarter Housing Forecast Report from Corelogic and Moody’s Analystics.

Tighter credit conditions in 2018 saw Sydney’s housing market fall by 5.8 per cent, after a 12.8 per cent rise in 2017, while Melbourne values dropped 0.1 per cent last year.

However, Sydney’s apartment values are set for a modest recovery, following a 2.9 per cent decrease in 2018.

“Peaks and troughs in previous cycles have been steeper for houses, which in part reflects the difficulty in unlocking new supply; conversely, apartment supply tends to outstrip house supply in Sydney,” Moody’s Analytics economist Katrina Ell said in a release.

“A high level of supply has now come on line for apartments in the inner city and sur- rounding areas as well as dwellings in suburban areas via land releases and removal of some development restrictions – this will contribute to the forecast slowdown in 2018 and 2019.”

CoreLogic’s latest Hedonic Home Value Index showed national dwelling values fell 2.3 per cent over the December quarter – the worst quarteron-quarter decline since 2008 – with most regions of Australia recording a weaker performance as national values dropped 4.8 per cent in total in 2018. For the next 12 months, Moody’s predicts house values across Brisbane will gain a mild 1.2 per cent in 2019.

Despite commodity prices stabilising, house values in Perth will likely decline 2.8 per cent in 2019, followed by a recovery in 2020, thanks to population growth.

Adelaide’s housing market will continue its stable run with a 2.6 per cent rise in 2019.

Greater Melbourne house values are now 11 months into a correction, with the decline accelerating to a low not seen since the global financial crisis.

House values in Melbourne’s inner east have fallen 12.5 per cent from their peak in July 2017, while house values in the city’s inner south and inner metro area have decreased 11.3 per cent and 8.3 per cent.

The Organisation for Economic Co-operation and Development says a burst housing bubble remains the greatest risk to the nation’s $1.3 trillion economy.