April Market Outlook

April Outlook

Cameron Kusher, CoreLogic Research Analyst

April 2018

According to the CoreLogic Home Value Index, national dwelling values were unchanged in March 2018.  Although values were unchanged nationally, the weakness across the combined capital cities persisted while the combined regional markets continued to see values climb.  Combined capital city dwelling values fell by -0.2% in March 2018 and, although this was the slowest rate of monthly decline since November 2017, it also marks the fifth consecutive month of value declines.  The combined regional markets recorded a 0.4% increase in values over the month which was the same magnitude of increase as recorded in February 2018.

  • Sydney, Melbourne and Adelaide were the only capital cities in which values fell in March however, declines across the two largest capital cities were enough to drag the combined capital cities index lower. Regional South Australia and regional Northern Territory were the only non-capital city regions in which values fell over the month.
  • Throughout the first quarter of 2018, national dwelling values declined by -0.5% which marked the fourth consecutive month in which values were lower over a three month period. Combined capital city dwelling values fells by -0.9% over the three months which was actually lower than the -1.2% decline over the three months to February 2018.  Regional dwelling values increased by 1.1% over the first quarter which was the greatest increase in values over a three month period since May 2017.
  • Looking at the individual capital cities, Hobart was the only city to record an increase in values over the quarter (+3.4%) while values in Brisbane were unchanged. Elsewhere values were lower over the quarter in Sydney (-1.7%), Melbourne (-0.5%), Adelaide (-0.4%), Perth (-0.2%), Darwin (-0.1%) and Canberra (-0.2%).  In the regional markets, regional Western Australia was the only region to record a quarterly decline in dwelling values (-0.6%).  Values rose over the quarter in regional New South Wales (+0.9%), regional Victoria (+1.6%), regional Queensland (+1.1%), regional South Australia (+0.6%), regional Tasmania (+2.5%) and regional Northern Territory (+1.5%).  Perth and Hobart were the only capital cities that recorded stronger value growth over the quarter than their rest of state region.
  • Over the past 12 months, national dwelling values have increased by 1.2% which is their slowest annual rate of growth since December 2012. While both the combined capital cities and combined regional markets are experiencing slowing value growth, at least on an annual basis, the gap between the performances of the two broad regions is widening as capital city markets weaken and growth rates edge higher over recent months across the regional markets.  Over the past 12 months, the combined capital cities index has increased by 0.8% which is its slowest annual rate of growth since November 2012.  The combined regional market index has risen by 2.6% over the past year which is its slowest rate of growth since June 2015.
  • Across the capital cities, dwelling values have fallen over the past 12 months in Sydney (-2.1%), Perth (-2.4%) and Darwin (-7.5%). Hobart is the only capital city to record double-digit annual growth over the past year (+13.0%) with values also increasing in Melbourne (+5.3%), Brisbane (+1.3%), Adelaide (+1.7%) and Canberra (+2.9%).  Regional South Australia (-1.7%) and regional Western Australia (-5.3%) were the only regional markets in which values fell over the past year.  Over the same timeframe, values increased in regional New South Wales (+5.1%), regional Victoria (+4.0%), regional Queensland (+0.5%), regional Tasmania (+5.4%) and regional Northern Territory (+0.5%).
  • With value growth generally slowing, vendor confidence has been dented, as demonstrated by a reduction in the amount of freshly advertised housing stock coming to the market for sale.
  • Nationally, over the 28 days to 1 April, there were 41,523 new properties advertised for sale and 222,054 total properties for sale. New advertisements are -4.0% lower than a year ago while total advertisements are -3.6% lower.
  • Newly advertised properties for sale are currently -7.8% lower than a year ago across the combined capital cities and they are lower across each individual capital city. The largest falls in new listings compared to 12 months ago were recorded in Darwin (-26.3%), Canberra (-13.7%), Adelaide (-11.6%) and Melbourne (-10.1%) with more moderate falls in Sydney (-7.7%), Brisbane (-4.5%), Perth (-2.8%) and Hobart (-7.8%).  The data suggests that vendors are responding to softer housing market conditions g with fewer vendors advertising their properties for sale
  • Total stock for sale across the combined capital cities is 3.5% higher than it was a year ago. Compared to a year ago, stock for sale is higher in Sydney (+25.3%) and Melbourne (+2.8%) but lower in Brisbane (-1.6%), Adelaide (-4.5%), Perth (-4.2%), Hobart (-36.0%), Darwin (-9.5%) and Canberra (-5.2%).  Sydney in particular is experiencing high stock levels despite fewer new listings which reflects the fact properties are proving harder to sell and are sitting on the market for longer.

Let’s take a look at the outlook for each capital city and rest of state region.

  • Dwelling values in Sydney have been declining since the middle of 2017 and as at the end of March 2018 were -3.9% lower than their peak. Tighter lending policies and stretched housing affordability have been key drivers of the slowdown in the market, as has the rising volume of stock listed for sale.  The rate of decline has slowed in Sydney however it is likely that declines will continue, just at a slower pace.  Outside of Sydney regional markets are recording a more rapid rate of value growth however, these regions are also experiencing a slowdown in growth.  In regional New South Wales values are expected to continue to climb however, the pace of growth is anticipated to slow over the coming months.
  • Melbourne dwelling values have fallen over each of the past four months and they are now -0.7% lower than their peak. Compared to Sydney, value declines remain moderate in Melbourne which is likely due to stretched yet relatively more affordable housing and ongoing strong migration to the city.  Over the coming months it is anticipated that values will continue to decline moderately. Values are rising in regional Victoria and the rate of growth has remained fairly steady, a trend which we expect to continue over the coming months.
  • Dwelling values in Brisbane increased moderately in March 2018 after two months of declines. Over recent years Brisbane’s housing market has been characterised by moderate value growth which is expected to continue over the coming months.  Values are also rising at a fairly slow pace in regional Queensland, a trend also expected to continue, with the strongest growth occurring in the south-east regions of the state.
  • Adelaide dwelling value growth has slowed with falls recorded over some recent months. Adelaide values are now -0.4% lower than they were at their peak.  Overall we expect values to remain steady or trend slightly higher over the coming months.  Values in regional South Australia have trended lower over recent months and we expect that values are likely to be very little changed over the coming months.
  • Recently it has looked as if the declines in the Perth market are coming to an end. Over recent months we have consistently been seeing moderate falls or slight increases in the index and sales activity is beginning to pick-up.  Despite the recent steady performance, values remain -10.8% lower than they were at their peak.  Over the coming months Perth home values are expected to hold reasonably firm with modest month to month falls being offset by modest rises.  In regional Western Australia values rose over the month but were lower over the quarter.  It is expected that values will trend moderately lower over the coming months.

Hobart is overwhelmingly the strongest market for value growth currently, a position it is expected to continue to hold over the coming month.  Low stock levels and strong demand continue to fuel growth in the market.  Values are also rising in regional Tasmania with these increases expected to also continue over the coming months.

Darwin values rose in March but they were lower over the quarter and year.  We are expecting weaker housing market conditions to persist over the coming months.  While Darwin values are lower over the year, regional Northern Territory values are slightly higher. It is expected that conditions will be relatively flat over the coming months in regional Northern Territory.

Values rose in Canberra over the month but they were lower over the quarter.  The annual rate of value growth is slowing for the city and it expected that values could rise at a slow rate over the coming months.

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