The latest hedonic home value index from CoreLogic found that six out of the eight Australian capital cities experienced a drop in dwelling values over the first month of 2018, and unless something changes, the market may continue to soften over the course of the year.
While national dwelling values only fell by -0.3% in January, the largest contributor to this figure was the -0.9% drop in dwelling values recorded in Sydney. However, despite this fall in values, the vast majority of Sydney home owners are understood to remain in a strong equity position.
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Overall, the combined capitals saw a -0.5% drop in dwelling values over the first month of 2018. The only capital to experience value growth in January was Hobart, which saw an increase of 1%, and while Brisbane remained unchanged, all other capitals experienced falling values.
Australia’s combined regional markets rallied over the month, seeing an 0.2% increase in dwelling values.
CoreLogic head of research, Tim Lawless, said that while the reduced housing market activity over the December/January period can contribute towards higher volatility in housing market measurements, this seasonality doesn’t exert much influence over the trend in hedonic valuations:
“While January may deliver additional noise in the indices results, the negative monthly result lines up with recent months, which showed a softening trend, particularly in Sydney and, to a lesser extent, Melbourne.”
“In the absence of a catalyst to reinvigorate the market, such as lower mortgage rates or a loosening in credit policies, we expect to see a continuation of softening conditions across these markets.”