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Compared to 2017, home values across the capitals declined over the year but Canberra and smaller capitals such as Hobart, posted some of the strongest growth nationwide at 4% and 9.3% respectively, according to Tim Lawless, research director, APAC, CoreLogic.
Sydney values have declined by 8.1% from their peak in July 2017 and Melbourne by 5.8% from a peak in November 2017 –further declines are likely in 2019 with prices in Sydney on track to fall 15% in total.
“There are some mainstream economists who are suggesting Sydney and Melbourne could be down by as much as 20% from peak to trough but I’m a little more optimistic than that,” Lawless says.
“I wouldn’t say that would be a worst-case scenario, more a realistic case. We have already seen Sydney dwelling values fall by around 9.5% peak to trough, so it isn’t that much of a stretch to see the overall market fall another 5% over the year,” he continues.
Looking ahead, Lawless adds, “The best case outlook would be that conditions start to level out; we start to see a rate of decline easing off and then the market finding a floor.
“Under a worst case scenario, we would see credit tightening further, economic conditions slowing down and potentially mortgage rates starting to rise as well,” he continues.
In reality, Lawless says it is most likely the actual outcome will fall somewhere between the two extremes, with the bad news concentrated in Sydney and Melbourne and steady conditions in the other capitals. It is also likely that Hobart will see a slow down in its rate of growth.
“We also expect some of the smaller capital cities like Brisbane and Adelaide will continue to show growth and particularly parts of Queensland, on the back of migration rates that are really ramping up interstate,” Lawless says.
Auction clearance rates will also show some recovery, although mostly due to a lower number of properties being listed.
