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National Housing Market Update | December 2017 - YouTube
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[0]
- Welcome to CoreLogic's update
[1]
on housing market conditions
for December 2017.
[9]
Nationally dwelling values
were unchanged in November 2017
[12]
according to the CoreLogic
home value index.
[15]
The rate of value growth has
slowed over recent months
[17]
due to falls in Australia's
largest housing market, Sydney.
[20]
Which accounts for around one third
[22]
of the total value of national housing.
[24]
Splitting the monthly change out
[25]
into the combined capital city
[27]
and combined regional markets
[28]
shows that capital city dwelling values
[30]
fell by .1% and regional
values rose by .2%.
[34]
Over the past three months
capital city dwelling values
[37]
were .2% higher, while regional
values increased by .4%.
[41]
On an annual basis the
pace of capitol gains
[44]
is halved over the past six months.
[45]
With value growth slowing
to 5.2% nationally,
[48]
with the combined capital cities
[50]
recording an increase of 5.5%
[52]
and combined regional
market values up 4.2%.
[55]
The 5.2% increase in
national dwelling values
[58]
is the slowest annual rate
of growth in 12 months.
[60]
Of course at that time
[62]
the first round of macro
prudential policy changes
[64]
was still working its way
through London conditions
[68]
which was slowing the market.
[69]
However the 50 basis points
worth of cash rate cuts,
[72]
eventually led to a
rebound in value growth.
[75]
Sydney is well and truly the driver
[76]
of the slowdown in the
national housing market.
[78]
Since Sydney dwelling values
peaked in July of this year
[81]
they've fallen by 1.3%
[83]
with the declines accelerating each month.
[86]
Although values have fallen in Sydney
[87]
between February 2012 and July 2017
[91]
they increased by 75%.
[93]
So the recent pullback has
been fairly minor today.
[95]
Outside of Sydney the rate of growth
[97]
has also begun to slow in
most other capital cities.
[101]
Melbourne values have been showing
[102]
consistent and moderate
growth over recent months
[104]
with a growth much more moderate
than earlier in the year.
[107]
Brisbane, Adelaide, Hobart, and Canberra
[109]
have also seen their monthly
rates of value growth
[111]
slow significantly from the rates
[113]
they were seeing earlier in the year.
[114]
Perth is the exception
with values down almost 11%
[117]
since peaking back in 2014.
[119]
The past three months has seen a
[121]
consistent but subtle rise in values.
[123]
Darwin dwelling values
have continued to fall,
[125]
continuing the trend
the city has been seeing
[127]
for a number of years now.
[129]
Although generally housing
market conditions have slowed
[132]
the overall performance of
individual capital cities
[135]
and product types remains
as diverse as ever.
[137]
Across the individual capital cities
[139]
the quarterly change in values has varied
[142]
between a 3.3% rise in Hobart
[144]
to a 2.7% fall in Darwin.
[147]
Over the past year the changes have varied
[149]
between an 11.5% increase in Hobart
[151]
to a 5.5% decline in Darwin.
[154]
The supply of new units has hit
[156]
unprecedented levels over recent years
[158]
and the unit market is now
underperforming houses.
[161]
In fact Sydney and Perth
are the only cities
[163]
in which change in house
values over the past year
[165]
has been inferior to the
change in unit values.
[168]
In the non-capital city markets
[170]
regional areas of New South Wales
[172]
continue to see the
strongest increase in values.
[174]
Much like Sydney,
[175]
many of these regions
[176]
are now seeing their rate of growth slow.
[178]
Although a few are still
seeing values rise.
[181]
Many of the strongest performing markets
[183]
outside of the capital cities
[184]
are located close to capital cities
[187]
and offer an attractive
lifestyle for residents.
[190]
Regional New South Wales
[191]
has recorded the greatest
increase in values
[193]
of all regional markets
[194]
up 8.7% over the past year.
[197]
The 4.5% increase in values
in both regional Victoria
[200]
and Tasmania have also been significant.
[202]
Albeit rises are more moderate
[204]
than the capital cities
in each of those states.
[206]
Overall regional markets remained diverse.
[209]
The strongest value
growth is typically found
[211]
in regions adjacent to the capital cities
[213]
and located in either coastal
or tree change locations.
[216]
In New South Wales,
Newcastle and Lake Macquarie
[219]
has seen the greatest value increase.
[221]
While in Victoria it has been Geelong.
[223]
In Queensland the Sunshine Coast has been
[225]
the strongest performed region.
[227]
And south Australia's
strongest region for growth
[229]
was the southeast.
[231]
In western Australia values
have fallen across the state.
[233]
But Bunbury has recorded
the most moderate decline
[236]
while in Tasmania
Launceston in the northeast
[239]
has been the strongest
performing regional market.
[242]
Let's take a look around each
capital city housing market.
[245]
Sydney has now seen values fall by 1.3%
[248]
from the market peak
and the rate of decline
[250]
has gathered pace each
of the past three months.
[252]
Over the past month
values have fallen by .7%
[255]
which is our largest monthly
fall since February 2016.
[259]
While values are 1.3% lower
over the past three months.
[262]
Values have increased
by 5% over the past year
[265]
which is less than half the rate of growth
[266]
recorded two months ago.
[268]
The decline in dwelling
values is anticipated
[270]
to continue over the coming months.
[272]
The driving factors
behind the downturn remain
[274]
stretched affordability,
tighter credit policies
[276]
for investors who have been
a key driver of demand,
[280]
and increasing outflow
of residents from Sydney
[282]
to other parts of the country,
[284]
and a heightened value of
stock available for sale.
[287]
Despite these factors
ongoing loan mortgage rates,
[290]
strong overseas migration,
and a strong economy,
[292]
are expected to provide a floor against
[294]
any substantial falls in values.
[297]
The Melbourne housing market
[298]
has lost some of its heat recently.
[299]
However it has not resulted in declines.
[302]
Values increased half
a percent in November
[304]
as they did in October and August.
[306]
Over the past three months
values have increased
[308]
by 1.9% and values are up
10.1% over the past 12 months.
[313]
The annual rate of growth has slowed
[314]
from its most recent peak
of 13.1% in July 2017.
[318]
Houses have recorded a
stronger rate of growth
[321]
than units over the last three
months and the past year.
[323]
While Sydney has slowed,
[324]
Melbourne's relatively resilience
[326]
can be attributed to strong overseas
[328]
and interstate migration flows,
[329]
a strong economy, relatively
more affordable housing,
[332]
fewer investors over recent years,
[335]
and volumes of stock for
sale which remain similar
[337]
to those recorded over recent years.
[340]
Brisbane's growth in dwelling values
[342]
has remained fairly slow and steady.
[343]
Over the past month values
have increased by .1%
[346]
to be .6% higher over
the past three months
[349]
and 2.4% higher over the past year.
[352]
While neither houses or units
[353]
are reporting a significant growth,
[355]
there is a divergence between
the two property types.
[357]
With house values 3.2%
higher over the past year
[361]
while unit values have fallen by 1.2%.
[364]
Brisbane is well and truly
underperformed growth
[366]
in Sydney and Melbourne over recent years
[367]
and dwelling values are 46%
lower than those in Sydney
[370]
and 32% than those in Melbourne.
[372]
The housing market
outlook remains positive
[375]
given its affordability gap
[376]
and the recent improvement
[377]
in job creation across Queensland,
[378]
which may prove enough to attract
[380]
an increasing number of residents
[382]
out of less affordable housing markets
[384]
in New South Wales and Victoria.
[386]
Adelaide's housing market
[387]
has seen values continue to increase.
[389]
However the rate of growth
does appear to be slowing.
[391]
Dwelling values were unchanged in November
[393]
and only .1% higher over
the past three months.
[396]
Over the last 12 months dwelling values
[398]
have increased by 3.4%
[400]
which is the slowest annual
rate of growth for a year.
[403]
Over the past year house
values have increased by 3.7%
[406]
while unit values are just .9% higher.
[409]
While value growth appears to be slowing,
[411]
Adelaide remains
significantly more affordable
[413]
than other mainland capital cities
[415]
and sales volumes have increased
by .9% from a year ago,
[418]
suggesting there has been a
moderate lift in buyer demand.
[422]
The Perth housing market
appears to have moved
[423]
through its decline phase.
[425]
Values have increased
over each of the past
[427]
three months to be .3%
higher over the quarter.
[430]
This is the strongest period of growth
[431]
over a three month period since June 2014.
[434]
It isn't only value data which indicates
[436]
improving housing market
conditions in Perth.
[439]
The number of days it take to sell a home
[440]
has fallen from 68 days
a year ago to 59 days.
[443]
The number of properties listed for sale
[445]
is approximately 13%
lower than a year ago.
[448]
And sales volumes are
up 1.4% on a year ago.
[451]
Growth is expected to remain moderate
[453]
but it seems as if the worst
of the market conditions
[456]
are now behind Perth.
[457]
Hobart dwelling values
increased by .6% over the month
[460]
and the city has seen
the greatest value rises
[462]
of all capital cities
over the quarter and year.
[464]
Dwelling values have increased
by 11.5% over the past year.
[468]
However over recent months
the annual rate of growth
[470]
has slowed after peaking
at 14.3% in September 2017.
[475]
Despite the recent moderation
[476]
values have increased
at a double digit rate
[479]
annually throughout 2017.
[480]
Prior to 2017 the last time Hobart values
[483]
increased at a double digit annual rate
[485]
was all the way back in September 2004.
[488]
Which highlights the relative
strength over the past year
[490]
but also the previous weak trend.
[492]
Although value growth has slowed
[494]
there remains little stock for sale
[496]
and this combined with affordable housing
[497]
and improving labour market
and migration accelerating,
[501]
these factors are likely to support
[502]
further increases in values.
[504]
Darwin dwelling values
have continued to decline
[506]
over the month, quarter, and year.
[507]
After values fell 5.5% over
the 12 months to November 2017.
[512]
Darwin dwelling values are now 20.8% lower
[515]
than their peak with no real sign
[516]
the slide in values is set to slow.
[519]
The fall in values
[520]
has greatly improved housing affordability
[521]
which has resulted in
rental yields improving.
[524]
However the vital element
missing from the market
[526]
is confidence.
[527]
Canberra dwelling values
increased by .9% in November
[530]
which was the greatest increase
out of all capital cities.
[532]
Dwelling values have risen
by 5.8% over the past year
[536]
with the market having
slowed over the recent months
[538]
following a peak rate of growth of 8.8%
[541]
in April of this year.
[542]
The annual data also shows a
fairly substantial difference
[545]
between growth for houses and units.
[547]
With house values 6.8% higher
[549]
compared to just a 2.9%
increase for units.
[552]
The primary driver of the
slowing housing market
[554]
is Sydney and a number of macro factors
[555]
appear to be driving this slowdown.
[557]
The banking regulator Apra has introduced
[559]
a range of macro prudential measures
[561]
which have resulted in tighter
service ability calculations
[564]
and a limited availability of investor
[566]
and interest only borrowings.
[568]
The first round of policy changes
[569]
which focused on reducing
[570]
the availability of credit to investors
[572]
led to a slowdown in the housing market
[574]
which was cut short by
two 25 basis point cuts
[578]
to the cash rate in May
and August of last year.
[580]
The second round limited the availability
[582]
of interest only lending and has also led
[584]
to many lenders increasing mortgage rates
[586]
for both investors and
interest only borrowers.
[589]
The latest September
data shows that demand
[591]
for interest only mortgages in September
[592]
sunk to levels well below
the prescribed 30% cap.
[596]
It seems at this stage extremely unlikely
[599]
that the reserve bank will
cut interest rates once,
[602]
let alone twice, to
provide a similar relief
[604]
to borrowers to that which
was provided in 2016.
[607]
Overall these macro
prudential policy changes
[609]
are seemingly acting as a disincentive
[611]
for investment in the market
[613]
and have coincided
[614]
with the current housing
market's slowdown.
[616]
Additional factors which are
also impacting on the market
[620]
is stretched housing affordability,
[622]
particularly in the two
largest housing markets.
[624]
An increase in the volume
of stock available for sale.
[627]
And growing concerns and
warnings from regulators
[630]
about the record levels of
household and housing debt.
[633]
While the previously mentioned factors
[635]
point to several weaknesses
for the housing market
[637]
there are a number of reasons to believe
[638]
that any reduction in values,
[640]
particularly in Sydney or Melbourne,
[642]
is likely to be moderate.
[644]
Financial markets do
not expect the cash rate
[646]
to be increased until 2019,
[648]
which suggests that there is unlikely
[650]
to be any significant
movement in mortgage rates
[652]
over the short to medium term.
[654]
The labour market is continuing to improve
[657]
and jobs growth is becoming
more widely spread.
[660]
And unemployment generally is reducing.
[663]
Another factor to consider
is as values fall in Sydney
[666]
there remains significant
demand for housing
[668]
via high rates of population growth.
[670]
We would anticipate
that it would only take
[672]
a moderate fall in values in a market
[674]
with so much demand
[676]
to see many buyers returning.
[678]
The housing market remains diverse.
[679]
However as we are now witnessing
[681]
markets don't continue
to rise or fall forever.
[683]
They run in cycles.
[684]
After values have risen
by more than 70% in Sydney
[687]
over the past five and a half years,
[689]
values are now falling.
[690]
While following falls in
excess of 10% in Perth
[693]
we are now seeing some
stability return to that market.
[696]
Overall the slowing of
Sydney's housing market
[698]
given its recent growth,
[700]
should not come as a surprise.
[701]
Furthermore a slowing of the
nations largest housing market
[704]
will result in weaker
headline growth figures
[706]
for the national housing market.
[708]
A trend we expect to continue in 2018.
[711]
If you would like to keep a
closer eye on the housing market
[713]
check out the CoreLogic
website where we are updating
[715]
our perspectives on the housing
market on a daily basis.
[718]
Www.corelogic.com.au.
[723]
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