The national dwelling values show a decline in May 2018, triggered by weaker conditions in Melbourne and Sydney.
According to the May CoreLogic home value index results, Australian dwelling values slipped 0.1 percent lower in May. This month also marked the eighth consecutive month-on-month fall since the national market peaked in September last year.
The previous downturn, which ran briefly from late 2015 to early 2016, was also driven by tighter credit conditions. Lasting for just five months, the national dwelling values fell by 97 basis points but recovered quickly following two 25 basis point cuts to the cash rate.
CoreLogic head of research Tim Lawless believes the negative headline growth rate is a symptom of weakening housing conditions across the capital cities, led by Melbourne and Sydney. Since these two capital cities represent approximately 60 percent of Australia’s housing market by value, and 40 percent by number, their performance has a larger effect on the headline market performance.
Melbourne has taken over from Sydney as the weakest performing housing market over the past three months.
Recording a 0.5 percent fall in values over the three months ending May, Melbourne is facing the largest decline in dwelling values since February 2012.
Five of Australia’s eight capital cities also saw dwelling values flounder month-on-month in May. These include Sydney (0.2 percent), Perth (-0.1 percent), Darwin (-0.2 percent) and Canberra (-0.1 percent).
The CoreLogic report also reveals that the more expensive end of the housing market was the primary driver for weaker conditions; unit markets have shown some resilience to falling values in Sydney and Melbourne; regional markets are outperforming the capital cities; weekly rents are rising despite the dwelling values trending lower; and gross rental yields across the capital cities have consistently improved over the first five months of the year.
Summarising the May results, Lawless says that housing market conditions are now following a new trend, where regional markets are outperforming the capitals, affordable housing options are showing stronger conditions than expensive properties and the previously top performing regions are now amongst the weakest.