National property prices recorded their first fall since 2012, signalling an end to the spectacular boom Australia has experienced.
According to Domain, Australia’s property price correction still has some way to go, with economists debating over the size of the correction but many agreeing that the downturn of the property market is just getting started.
Since peaking in December 2017, national house prices have fallen 2 per cent and units are down 2.2 per cent, according to Domain Group data, and the downturn could be as little as one-sixth of the way through or as much as halfway, depending on which economist you ask.
House prices across capital cities fell 1 per cent over the last quarter and 1 percent over the year, while unit prices across the capital cities gave up 0.4 per cent in the quarter and 2.2 per cent over the year.
The economists cite a number of factors driving the market downwards, with the key concerns being tighter lending rules and the possibility of further changes to come following the royal commission into banks. Out-of-cycle mortgage rate hikes and possible changes to property tax-setting are also noted as contributing to weakening prices.
Once the epicentre of Australia’s housing boom, Sydney now leads the fall, giving up 4.5 per cent over the year – its worst result since the GFC. Sydney’s median house price now sits at $1.14 million.
However, the good news is that the current climate is presenting buyers with some great purchasing opportunities not seen in most Australian markets for many years.
First home buyers may see a window after annual double-digit percentage price growth in Sydney and Melbourne had them on the back foot for several years. With changes to bank lending standards putting pressure on investors and interest-only borrowers, the possibility of distress selling could prove a first-home buyer hunting ground.
All of this said, the major challenge for buyers at the moment is a lack listed stock available for sale. This is seeing some markets recording a 30% drop on the usual number of properties for sale compared with the same time in 2017. And with a generally warm and settled winter which would normally result in more listings than usual, longtime real estate professionals suggest that the actual cooling of the market could be substantially more than that percentage drop suggests. High end property is slowing fastest.
Additionally, the trend to “off market sales” and the use of Buyers’ Agents are rapidly expanding, and while both these options have been widely used in upper quartile sales in the past, both are now actively part of the market from investor property to apartments, family homes to downsizers and of course, high value property.
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