The CoreLogic July home value results confirmed that national dwelling values continued their weak run, with both capital city and regional dwelling values trending lower over the past three months.
National dwelling values slipped 0.6% over the month to be down 0.9% over the rolling quarter and 1.6% lower over the past twelve months; the largest annual fall since August 2012.
Since peaking in September last year, the Australian housing market has recorded a cumulative 1.9% fall in value; a relatively mild downturn to date considering values remain 31% higher than they were five years ago. According to CoreLogic head of research Tim Lawless, the weakness in dwelling values is being driven by the long running declines in Perth and Darwin along with an acceleration in the rate of decline across Sydney and Melbourne and slowing growth rates across most of the remaining regions.
The month of July saw the housing downturn gather some momentum; on a national basis, the 0.6% month on month fall was the largest decline since September 2011 and the rolling quarterly change, at -0.9%, hasn’t been this low since January 2012. Five of the eight capital cities saw values slip lower over the past three months and trends across the regional housing markets, where conditions have generally been more resilient to falls, have also turned negative.
Dwelling values were down 0.2% across the combined regionals index over the three months ending July, driven by falls across regional NSW (-0.2%), regional Qld (-0.6%) and regional WA (-3.5%). While three of the seven ‘rest of state’ regions saw a fall in values over the three month period, the pace of growth across the remaining regional areas has clearly decelerated, contributing to the overall softer result.
Across the capital cities, Melbourne has been leading the downturn, with the quarterly rate of decline outpacing Sydney since May this year. Melbourne dwelling values were down 1.8% over the past three months, followed by Perth (-1.5%) and Sydney (-1.1%). Melbourne’s decline phase commenced five months later than Sydney’s, with the market peaking in November last year. Since that time, Melbourne dwelling values have fallen by 2.9%, while in Sydney, where values peaked twelve months ago, the market is down 5.4%.
Those cities where values continue to trend higher have also seen a sharp reduction in their rate of capital gain. In Brisbane and Adelaide, where housing values were rising at a more sustainable pace over the past five years, the annual rate of capital gains has weakened. In Brisbane, the annual rate of growth has eased from 2.9% a year ago to 1.2% over the past twelve months and in Adelaide the annual growth rate has dropped from 5.4% a year ago to just 0.7% over the most recent twelve month period.
Even the Hobart market, where the annual pace of capital gains has held in double digit growth territory since January 2017, is starting to slow down. Dwelling values were steady over the month and the annual rate of growth slowed to 11.5%; still strong but the slowest annual growth rate since February 2017.