Housing prices in Melbourne and Sydney have dropped 1.2% and 1.8% respectively in a month, a rate that is alarmingly quicker than what we have seen throughout this year.
Combine this with property listings in both Melbourne and Sydney boosting over 20% in the last year, and it make sense that vendors are lowering their price expectations in order to lock in sales and reflect decline rates.
Investors, especially home owners, need to make sure that every decision from here on in also reflects current changes and more accurately housing market declines. That’s just being prepared, and with current forecasts warning of declines continuing into 2024, you need to know how you can survive it.
That’s why Harry Dent has set out two rules you need to know in order to survive Australia’s potential property collapse leading into 2019 and after. You can read more about it here for free.
Housing market extent, monthly recap
Australian property prices fell sharply across the board last week, driven by further declines in Melbourne, Sydney and Perth.
House prices in Sydney, Melbourne, Brisbane, Adelaide and Perth all fell by 0.3% in averaged weighted terms, which is slightly lower than the 0.4% pace also recorded by CoreLogic a week earlier.
Individually, Melbourne’s median house prices were falling 0.4% two weeks ago, only to continue to fall by 0.3% last week, totalling a 1.3% in price declines in the past month.
Meanwhile, Sydney’s median price sank 0.5%, continuing the declines seen the last month to 1.8%. Combining the weekly lows of the last two weeks, Sydney’s median property price has tumbled 10% from its cyclical peak back in the middle of last year.
This overtook the 9.6% drop recorded between the late 1980s and early 1990s, in relation to nominal declines.
According to Business Insider Australia, these are currently the largest declines since reliable record keeping. And price declines are still charging forward with no sign of slowing coming into 2019. The last price correction happened just before Australia experienced the last recession. It’s also a good idea to keep an eye on Australia economic state, because it undoubtedly has an effect on housing market declines.
What’s driving housing market declines?
Something as complex as a declining housing market can never really be explained by one specific factor or occurrence.
But there are several reasons to look towards in the recent velocity of price declines in Melbourne and Sydney, as reported by CoreLogic’s head of research Tim Lawless as per Business Insider:
‘“The tightening in finance conditions has been more pronounced across the investor segment of the market, where Sydney and Melbourne have recorded much higher concentrations of investment demand,” Lawless said following the release of CoreLogic’s Home Value Index early last week, revealing that capital city home prices slumped by the most since the GFC in November.’
We have seen houses stay on the market longer, and homeowners in both Melbourne and Sydney are having to adjust to the markets in order to sell their properties.
Business Insider continues reporting Lawless:
‘The rebalancing towards buyers over sellers in Sydney and Melbourne is clear across CoreLogic’s vendor metrics, with clearance rates tracking in the low 40% range while private treaty sales are showing substantially longer selling times and larger rates of discounting than they have over recent years.’
For homeowners wishing to sell, this isn’t great news. If demand does not pick up by similar proportions in the market, then it suggests that prices could begin to weaken, given current trends remain.
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PS: Want to know how you could weather the Downturn in Australia’s property market? Economist Harry Dent reveals in his free report: ‘Two Rules for Surviving a Potential Property Collapse’.