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Sydney and Melbourne property to be most affected by royal commission: CoreLogic

8877238 16x9 700x394 - Sydney and Melbourne property to be most affected by royal commission: CoreLogic

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Updated

May 01, 2018 10:20:55

The fallout from the banking royal commission and APRA’s stricter lending policies will see Sydney and Melbourne markets hit hardest, according to property analytics firm CoreLogic.

“Credit policies aren’t likely to be relaxed,” said CoreLogic’s head of research Tim Lawless.

“Borrowers who could have borrowed money for housing finance six months ago will find it more challenging, especially if they want interest-only loans, or are buying for investment purposes.”

He predicted that values will continue to fall slightly in Sydney and Melbourne, “where the strongest growth has been, and where investors have been most concentrated”.

In its April report, CoreLogic found that dwelling values in Australia’s two biggest cities fell the most last month — by 0.4 per cent each.

On a quarterly basis, that’s a 1.2 per cent decline for Sydney, and a 0.7 per cent drop for Melbourne.

Sydney’s median dwelling value is $875,816 — a figure which includes both houses and apartments. But the median house price remains well above $1 million.

Melbourne’s median property value is $720,433.

Brisbane was the only other capital city to record a slight fall, down by 0.1 per cent.

‘Overheated’ Hobart to lose steam

While other capital cities recorded slight gains, Hobart outperformed once again — with a 1.2 per cent rise last month, and 3.6 per cent jump in property values over the quarter.

But Hobart’s consistent surge may not last much longer.

“It’s safe to say the Hobart market is already overheated,” Mr Lawless said.

“Its dwelling values have been rising at double-digit growth for almost a year, and it comes on the back of weak long-term performance.

“With values rising now on annual basis by nearly 13 per cent over the past year, Hobart values are at record-high, against a weak level of income growth.”

Mr Lawless said investors need to look at the Tasmanian capital with “some caution” now, and expects its rate of price growth to start “peaking out” soon.

Opportunities in Darwin and Perth

The property markets which have suffered severe downturns may present some buying opportunities.

Mr Lawless noted there are “potentially some bargains” in Darwin, which has seen its property values plunge 21 per cent since 2014.

Darwin’s dwelling values grew 0.6 per cent in the previous month, and 0.7 per cent in the last quarter — its first positive result in some time. But it has fallen by 7.7 per cent over the past year.

However, Mr Lawless cautioned that there currently not many drivers of growth in the Darwin market.

Mr Lawless made similar observations in regards to Perth, which has experienced property price falls of 11 per cent since its peak four years ago.

“The Perth market has been stable over April,” Mr Lawless said.

Perth property prices were flat in April, up by a slight 0.1 per cent in the last quarter, but down 2.3 per cent in the last year.

“We’re seeing seeing an improving trend [in Perth] as well as in other mining regions around country, which also had steep falls.”

Topics:

housing-industry,

economic-trends,

banking,

business-economics-and-finance,

australia

First posted

May 01, 2018 10:04:48

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