November 30, 2015 7:49pm
HOME values have started to fall in Sydney and Melbourne as the period of extraordinary price growth in the southern states begins to cool
The two powerhouse markets weren’t the only ones to experience a drop in property values with the latest CoreLogic RP Data November home value index revealing a drop in values in five of the eight capital cities in Australia during November.
But Adelaide has bucked the trend with the highest growth in the nation. Prices rose by 0.7 per cent in November, bringing the median dwelling value to $410,000.
The poor monthly results for most of the nation mean that dwelling values across the combined capital cities is now 1.5 per cent lower than it was last month.
CoreLogic RP Data head of research Tim Lawless, said the slower housing market conditions for Sydney and Melbourne had started earlier this year and had continued.
Values fell the most in Melbourne, where they were down by 3.5 per cent in November, Sydney values were down by 1.4 per cent.
In Hobart dwelling values dropped by 2.4 per cent, Darwin was down by 1.3 per cent and in Canberra 0.5 per cent.
The latest monthly results mean that dwelling values across the capital cities are now 0.5 per cent lower than they were three months ago.
Mr Lawless said he was surprised by some of the monthly results.
“I wasn’t expecting a drop as significant of what we saw in Melbourne, down 3.5 per cent,’’ he said.
He said it came at a time when the marketplace was moving through a changing point, with lower clearance rates, the changed lending environment and affordability constraints.
“I think it is no surprise to see the market place responding to those factors and slowing down and even falling, but of course as always the trend is always more important (than just looking at one month).’’
Mr Lawless said last month for Sydney and Melbourne had been a flat market, and now with this negative performance in November if that continued through December it would mean those markets had already moved through their peaks and into the next phase of the cycle which could be characterised by falls in values.
“That will be the real test of the market place, what do we see in December and January.’’
Mr Lawless warned the changing market could also result in future problems for buyers purchasing off the plan.
“With the housing market moving through the peak of the cycle at a time when there is a large number of new dwellings commencing construction, there is likely to be a heightened level of settlement risk for off the plan purchases,’’ he said.
“Those purchasers who have recently purchased off-the-plan may face challenges at the time of settlement if the valuation of the property is lower than the contracted price, or if mortgage finance is less freely available, or on more expensive terms.’’