Sydney, Melbourne home prices tipped to fall around 5 percent in 2018

Marco Green
January 13, 2018

Could this be the end of the Aussie housing boom?

Home values in Melbourne fell for the first time since February 2016, with dwelling values slipping 0.2% lower in December, but they were up 0.9% over the quarter and 8.9% for the year.

"In 2017 we saw growth rates and transactional activity gradually lose steam, with national month-on-month capital gains slowing to 0% in October and November before turning negative in December". Housing conditions have weakened nationally, and this is likely to continue in 2018, according to CoreLogic data.

In WA, searches across the entire capital of Perth have risen 12 percent on a year ago with a particular emphasis on upmarket suburbs like Cottesloe, where the median house price has recently cracked the $2 million mark.

Why are property prices down nation-wide?

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Darwin and Perth were the worst performing markets previous year, with property prices falling annually by 6.5 per cent and 2.3 per cent respectively.

National property markets ended 2017 with a whimper, with half of Australia's capital cities recording falling house prices in December.

Melbourne prices also fell in December, while the cost of housing in Darwin crashed by 6.5 percent past year.

Melbourne's median house price of $832,735 is a tenth of what this Toorak house is valued
Melbourne's median house price of $832,735 is a tenth of what this Toorak house is valued

"Sydney's housing market has become the most significant drag on the headline growth figures", said Tim Lawless, CoreLogic's head of research.

The harbour city's dwelling prices retreated 0.9 per cent in the month of December to be 2.1 per cent lower over the quarter.

Mr Lawless believes the housing downturn is "entrenched, with values trending lower since May 2014".

Homeowners in Melbourne are less likely to see the value of their property experience negative growth, but should expect capital gains to slow down in 2018. Obviously values have come off about 11 per cent from their peak (since 2014).

The trend was driven largely by Sydney, which experienced a 0.9 per cent drop in housing values in December and was again bucked by Adelaide, which experienced 0.2 per cent growth for the month.

"The substantial fall in values relative to rents has pushed Darwin rental yields to their highest level since July 2015 (5.9 per cent) and Darwin rental yields are the highest of any capital city", said Mr Lawless.

Hobart was the best performing capital city in 2017 with home prices rising 12.3 per cent, nearly five times higher than the city's decade average annual rate of capital gain.

Other reports by Click Lancashire

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