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Real estate boom might be over for Sydney and Melbourne
Property prices went backwards in six of Australia’s eight capital cities during May.
Sydney, Melbourne, Perth, Hobart, Darwin and Canberra all experienced month-on-month declines in their median property price, according to CoreLogic.
Looking at the three months to May, Sydney prices remained flat, while Perth, Hobart, Darwin and Canberra went backwards.
| Region | Median price | Monthly change | Quarterly change | Annual change |
|---|---|---|---|---|
| Sydney | $872,300 | -1.3% | 0% | 11.1% |
| Melbourne | $665,000 | -1.7% | 0.7% | 11.5% |
| Brisbane | $490,000 | 0.3% | 1.2% | 2.3% |
| Adelaide | $432,000 | 0.8% | 2.0% | 2.9% |
| Perth | $481,500 | -0.4% | -0.4% | -3.8% |
| Hobart | $350,000 | -4.8% | -1.0% | 5.8% |
| Darwin | $460,000 | -3.5% | -0.1% | -6.4% |
| Canberra | $600,000 | -0.1% | -1.5% | 5.7% |
| All capitals | $630,000 | -1.1% | 0.4% | 8.3% |
Evidence has been accumulating over the past few weeks that the boom in Sydney and Melbourne might be ending.
CoreLogic’s head of research, Tim Lawless, pointed out that property prices traditionally decline in May.
However, he also said that even accounting for seasonal factors, the Sydney and Melbourne markets appear to be slowing.
Most cities slowing down
Comparing these new statistics with the previous month’s statistics shows that five of Australia’s capitals recorded slower price growth in the year to May than in the year to April.
These are the markets that slowed down:
| Region | Year to April 2017 | Year to May 2017 |
|---|---|---|
| Sydney | 16.0% | 11.1% |
| Melbourne | 15.3% | 11.5% |
| Hobart | 13.6% | 5.8% |
| Darwin | -2.3% | -6.4% |
| Canberra | 8.4% | 5.7% |
| All capitals | 11.2% | 8.3% |
These are the markets that are sped up:
| Region | Year to April | Year to May |
|---|---|---|
| Brisbane | 2.1% | 2.3% |
| Adelaide | 2.2% | 2.9% |
| Perth | -6.0% | -3.8% |
Rates going up, confidence going down
Mr Lawless said two factors are working together to take the heat out of the national property market.
The first was the announcement on 31 March by the banking regulator, APRA, calling on lenders to make it harder for borrowers to qualify for mortgages.
“Mortgage rates are continuing to trend higher, particularly for investors,” he said.
“Another factor that is likely contributing to slower growth conditions is a dent in consumer confidence. Consumer sentiment towards housing, as measured by Westpac and the Melbourne Institute, has shown a marked downturn in May.”
Disclaimer
This article is over two years old, last updated on June 1, 2017. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.
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