CoreLogic’s February home value index shows the pace of declining values is slowing but average home values remain 18% higher than five years ago.
CoreLogic’s hedonic home value index recorded a fall of 0.7% in national home values in February, however, the trend of decline is slowing. Since the market peak in October 2017, values have declined a cumulative 6.8% but remain 18% higher than five years ago – highlighting that most homeowners remain in a strong equity position.
Generally speaking, regional home values are holding more firmly and the largest value declines are mainly restricted to the upper quartile of the market, led by Sydney & Melbourne.
Monthly change in capital city home value
Over the three months to February, the best performing capital city was once again Hobart at (+1.1%). The weakest capital was Darwin (-5.1%). The highest rental yields reside in Darwin (6%) while the lowest are in Sydney (3.4%).
Tighter credit conditions slow regions
The fact that we are seeing weakening housing market conditions across regions where values were previously rising at a sustainable pace, and economic conditions are relatively healthy, is a sign that tighter credit conditions are having a broad dampening effect on buyer activity.
Sales activity sharply down
Buyers lamenting a perceived shortage of homes for sale may find it illuminating to learn that national sales activity is down 12.8% year-on-year, with the sharpest reduction of homes for sale in Sydney (-20.6%) and Melbourne (-22.1%).
Perth and Darwin soften again
While the annual pace of declines in Perth and Darwin were previously showing signs of improvement, their markets have now worsened. The renewed downward pressure on prices appears to be related to softening labour market conditions and credit scarcity. Affordable properties more resilient It’s the most expensive end of the market that continues to lead the greatest price falls. The top quartile has seen values fall by 10.7% over the past 12 months whereas the most affordable quartile is down just 2.6%. This is why cities such as Hobart and Adelaide have put in such strong performances over the past year, while Sydney and Melbourne have seen the weakest performances.