CoreLogic’s December figures confirm 2018 was a very rough year for the Australian property market
Sydney home values fell 8.9% last year while Melbourne values fell 7.0%, but Hobart grew 8.7%.
Now that CoreLogic has released its final home value index figures for 2018, we can really understand just how much property values fell (and in a few spots, rose) in 2018.
And it's not just a tale of two struggling cities. While Sydney and Melbourne led the decline, CoreLogic head of research Tim Lawless notes that "most regions around the country have reacted to tighter credit conditions by recording weaker housing market results relative to 2017."
In capital city regions, the worst performing areas were Melbourne's Inner East (down 13.4% this year) and Sydney's Ryde (down 13.3%). Behind Hobart, the ACT saw the second-strongest growth at 3.3%.
Outside the capital cities, the areas with the biggest annual decline were Outback Queensland (down 14.1%) and Outback (South) Western Australia (down 11%).
Tasmania's solid performance wasn't isolated to Hobart, with Launceston and North East Tasmania growing 11.4%, the strongest performing non capital city region.
What's causing property market declines?
Lawless says "access to credit has been the most significant factor weighing down housing market conditions over the year" despite APRA's loosening of restrictions around interest-only borrowing.
It's also worth putting some of these declining values in a broader context: prices in Sydney and Melbourne have risen for years. Sydney's home values ended 2018 somewhere near their level in August 2016; Melbourne is back to February 2017 levels. This might be a welcome relief for many hopeful buyers, but no one would consider those levels affordable.
This is different in cities like Darwin and Perth, where home values have been falling steadily for much longer.
What do falling prices mean for first home buyers?
If you're a would-be homebuyer you're probably in a much better position than you would have been a year ago (unless you're buying in Hobart). But new borrowers are now finding it harder to get finance from cautious lenders. Tales of home loan applications getting rejected are becoming increasingly common. You need to make sure your application and finances are watertight.
Compare mortgages for first home buyers
Aussie Home Loans is both a lender and a mortgage broker, and offers a range of services.
- FREE Suburb and Property Report with every appointment.
- Access 3,000+ loans from over 20 lenders.
- Get expert help with your loan application, including paperwork and eligibility.
- Over 1000 brokers who are able to help you in your local area.
The Adviser’s number 1 placed mortgage broker 5 years running (2013-2017)
- Mortgage rate hikes continue, with UBank and Virgin Money raising some rates by 20 basis points
- Ask Finder: Can I get a mortgage offset account in my business’s name?
- APRA to remove interest-only home loan speed limits
- All of December 2018’s out-of-cycle rate changes
- Demand a better home loan deal, ACCC tells borrowers