Australian cities are experiencing a slowdown in all areas of the housing market, but some cities are faring worse than others according the latest market research. Sydney and Canberra are still seeing positive numbers in pricing and sales, while both have dropped in Perth and Brisbane, creating a two-tier property market in the country. Analysts attribute the gap to better sales of more modestly priced homes versus luxury accommodations in specific areas and the effects of natural disasters on particular regions. For more on this continue reading the following article from PropertyWire.
A gap is opening up in the Australian property market with prices in Sydney and Canberra continuing to rise but those in Perth and Brisbane falling, according to the latest house market index.
It also shows that cheaper properties are selling better than the luxury end of the market with interest rates and natural disasters such as the floods in January also taking their toll.
While the slow down in market conditions is evident across all cities, the Sydney and Canberra markets have remained positive with prices in Sydney up by 1.2% and those in Canberra up by 0.7% over the year to the end of April.
At the other end of the spectrum are Perth and Brisbane where home values continue to experience a more significant correction. Perth prices have recorded the largest fall of any capital city over the 12 months to the end of April, down 7.1% and in Brisbane they are down 6.8%.
Lawless said that the weak conditions seen in the Perth and Brisbane markets combined with the comparatively high capital gains recorded in Melbourne and Sydney has driven a widening housing cost gap.
Brisbane’s median house price is now 24% lower than Sydney’s and 14% lower than Melbourne’s. Perth prices are now 18% lower than Sydney’s and 8% lower than Melbourne’s. At its narrowest, the gap between Perth and Sydney prices was just 2.3%.
Claim up to $26,000 per W2 Employee
- Billions of dollars in funding available
- Funds are available to U.S. Businesses NOW
- This is not a loan. These tax credits do not need to be repaid
Nationally the price of properties in cities fell 0.3% in April and are down 1.2% on a quarterly basis, the RP Data-Rismark Home Value Index reveals. While in the regions prices are down 1.5%.
According to Tim Lawless, RP Data’s research director, expensive suburbs have helped drag the overall market down. Over the year to end April, properties in the most expensive capital city suburbs saw falls of 5.4%. In contrast, home values in the middle priced suburbs were down by only 0.9% and those in the cheapest suburbs were the best performers, hardly moving at 0.5%.
‘The solid performance of cheap suburbs runs against the grain of popular claims that default rates are rocketing up amongst first time buyers. The luxury end of the housing market is also showing its volatility. During the growth phase of the cycle the most expensive homes realised the highest capital gains. Yet as the market cools premium home values seem to be losing steam the fastest,’ said Lawless.
According to Rismark joint managing director, Christopher Joye, the uber luxury segment is ‘risky and highly illiquid’ and has suffered due to a combination of the soaring Australian dollar and the volatile share market.
‘A final fly in the ointment is the much lower growth and pay packets expected in the financial services industry going forward. Luxury homes in areas like Sydney’s Eastern Suburbs will continue to face valuation headwinds as banks deal with the new normal of subdued credit growth,’ he said.
The national median dwelling price in capital cities is $468,000 based on sales over the three months to the end of April. In the non capital city markets, the national median price is far lower at $325,000. Across all Australian regions, the median dwelling price is currently $418,000.
The market outlooks remains challenging as the number of homes for sale across the capital cities is now about 31% higher than at the same time last year. ‘Transaction volumes for houses and units remain about 13% below the five year average and 21% below the same time last year. The result is that a smaller number of prospective buyers have a larger pool of homes to choose from,’ said Lawless.
‘Properties are therefore taking longer to sell and vendors are having to adjust their price expectations downwards. Until stock levels start to be absorbed there is not likely to be upward price pressures,’ he added.
This article was republished with permission from PropertyWire.