According to figures from property data group Corelogic, Australia’s property market is showing signs of cooling. The national median house price index fell 0.3% in December, with major declines in Sydney and Darwin and modest weakness in Melbourne and Perth. The fall contributed to a slowdown in national home value growth for the year, with prices rising 4.2% in 2017 compared to 5.8% in 2016 and 9.2% in 2015. The head of research at Corelogic, Tim Lawless, stated that the transition towards weaker housing market conditions had been clear but gradual, and had been driven by the capital cities, which combined tracked half a percent lower over the December quarter. Sydney’s housing market has been the most significant drag on the headline growth figures, with dwelling prices retreating 0.9% in December and being 2.1% lower over the quarter. Melbourne’s housing market has been more resilient to negative growth due to factors such as stronger population growth, lower affordability hurdles, and a higher rate of job growth. However, the growth trend has been clearly moderating since late 2016. Hobart was the best-performing capital city in 2017, with home prices rising 12.3%. Lawless expects tighter credit policies to be the primary driver for a softer phase in the housing market cycle throughout 2018, with lower to negative growth rates in previously strong markets, more cautious buyers, and ongoing regulator vigilance of credit standards and investor activity.
Overall, it appears that the housing market in Australia is on track to cool in 2018 as prices fall in the country’s capital cities. This trend is being driven by a combination of tighter lending standards, economic uncertainty, and a growing trend of people choosing to rent rather than buy homes. It is not yet clear how long this cooling of the housing market will last, or what the long-term implications will be for the Australian economy. However, it is worth noting that the overall decline in house prices has been relatively modest so far, and many experts believe that the market will bounce back in the coming years. So, it is not a time to panic, but rather to be cautious and watchful of the market trends.