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Investor lending plunges 28.6% and Sydney’s price falls break the speed record

Suburban Aussie houses.

A street of Australian houses.

The only positive figures in Australian property right now are prices in Hobart and a small proportional increase in first home buyers.

There are many ways to look at the property market's health. Two of the best data sources are the ABS statistics on lending and CoreLogic's monthly price updates.

In short: the number of mortgages and the value of those mortgages has fallen over the last 12 months. Prices have fallen everywhere except Tasmania's capital.

We've looked into the data to summarise the details.

ABS lending finance

  • The value of mortgages for investment has fallen by a staggering 28.6% since January 2018.
  • The value of home loans for owner occupiers (not including people refinancing) fell 17.1% over the last 12 months.
  • The number of first home buyers taking out mortgages has fallen 12.6% over the last year, the number of non-first home buyers taking out owner occupier mortgages has fallen 15.3%.

This means first home buyers are taking up a proportionally greater share of mortgages even while the overall number of borrowers is dropping.

CoreLogic Property Update (14 March)

The folk at CoreLogic are Australia's property data experts, and they have helpfully tracked the recent price falls in Australian cities and put them in the context of other periods of decline.

From its most recent peak in July 2017, prices in Sydney have plunged 13.2% as of February 2019. CoreLogic is calling this "the deepest period of decline". Adding that "this current downturn may end up being the deepest and longest in modern times".

Peak to trough price falls in Sydney.

Source: CoreLogic Property Update March 2019.

Melbourne's market peaked in November 2017 and has since fallen by 9.2%. Melbourne has only seen a bigger drop in 1989-1992 (10.0%). The current fall in prices looks set to break that record and in much faster time.

The post mining boom property markets are seeing deeper, longer declines. Perth peaked in June 2014 and has slid 17.8% since. Darwin prices have fallen 27% since the city's May 2014 peak.

Prices have fallen only slightly in Adelaide (0.3%) and Brisbane (1.0%), but neither of these cities saw the wild growth of Sydney and Melbourne, so these falls are notable too.

Hobart continues to buck the trend, with 7.2% growth in the last year, although this looks to be slowing down.

So tell us the good news

There's not a lot of good news in the data.

CoreLogic's modelling suggests that "values are likely to continue trending lower, with the rate of decline easing later this year and into 2020".

If you're looking to enter the market for the first time you're in a better position now than 12 months ago. That's good! But you're still looking at 5 years of wild growth in Sydney and Melbourne (2012-2017), so it's not like buying a house is suddenly affordable.

So that's bad.

The only really good news is that interest rates remain extremely low. Compare your options and you can surely find a competitive fixed or variable rate well below 4%.

But lenders are getting stricter on who they lend to, so you might need to save a bigger deposit or cut back on unnecessary spending. That's kind of bad.

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