By Arthur Kokontis 2nd, December 2015
Source: Sitnok Global
House prices continue to slide in Australia
House prices in Australia continue to show falling prices.
Recent independent action by Australian banks not in unison with the Reserve Bank of Australia – saw them hike rates.
It started with Westpac Banking Corporation which increased its headline owner-occupier rates to 5.68 per cent, and investor rates to 5.95 per cent.
The rate hike took effect from November 20, and put the spotlight on the home loan interest rates charged by the other banks, which tend to copy each other on mortgage rates. The changes applied only to Westpac-branded loans, not St George, Bank of Melbourne or BankSA.
Add APRA regulations against investment and commercial property lending and prices commence a slide
An APRA-led crackdown on investor lending has seen the share of investor participation in the housing market fall to a two-year low of 45.4 per cent at the end of September, down from 54.1 per cent in May.
And so the rest followed suit.
Go forward only 6 weeks to 1st December 2015 – property prices have dropped in five of the eight Australian capitals, which dragged the combined capital cities price index 1.5 per cent lower over November, according to figures from CoreLogic RP Data.
The slide in capital city home prices marked the first fall in six months and the biggest slide nationally in 18 months.
The depreciation in price is more significant in Melbourne and Sydney, where home prices fell 3.5 per cent and 1.4 per cent, respectively, over the month.
This was the biggest slide for Sydney home prices in five years – although CommSec economist Savanth Sebastian added: “Keep in mind Sydney home prices are still up almost 13 per cent over the year.”
CoreLogic RP Data head of research Tim Lawless said: “Slower housing market conditions for Sydney and Melbourne became evident earlier in the year and continued throughout November,”
Home values in Hobart fell by 2.4 per cent, Darwin was down 1.3 per cent and Canberra slipped 0.5 per cent.
These figures push the Australian property price index down a total 0.5 per cent for the three months through November. Meanwhile, the annual rate of growth across the capital cities has pared back from peak of 11.5 per cent in April last year down to 8.7 per cent currently.
Tighter mortgage servicing criteria across the board and affordability constraints in the Sydney and Melbourne markets are now having an economic impact on market demand for property.
The exception: Price stability was seen in Adelaide property as prices gained 0.7 per cent during November, while Brisbane rose 0.6 per cent.
Reserve Bank of Australia likely appreciates a slowdown in the rate of home value appreciation, with the overriding objective being to avoid a significant downturn in the housing market, which would act as a weight on economic growth and potentially impact financial system stability.
DWELLING VALUE CHANGES
* Sydney: month -1.4pc, year +12.8pc
* Melbourne: month -3.5pc, year +11.8pc
* Brisbane: month +0.6pc, year +4pc
* Adelaide: month +0.7pc, year +3.3pc
* Perth: month +0.3pc, year -4.1pc
* Hobart: month -2.4pc, year +1.1pct
* Darwin: month -1.3pct, year -4.2pc
* Canberra: month -0.5pc, year +4.5pc
* All capitals: Month -1.5pc, year +8.7pc
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