Housing values fell last financial year - what happened?

Housing values fell last financial year - what happened?

Australia’s housing markets have slowed over the past financial year, according to CoreLogic, with most capital cities experiencing downturns and most regional areas experiencing relatively sluggish growth.

The difference between the downturn experienced over the 2017-18 financial year and other housing downturns over the past 20 years is that the latest slowdown in value growth was not precipitated through movements in the cash rate, according to CoreLogic:

“Independent increases to the cost of borrowing, particularly for investors, tighter credit conditions and a lack of real wage growth which has led to reduced affordability are some of the main drivers of the weakening housing conditions.” – Cameron Kusher, CoreLogic

Australia’s dwelling values – the big picture

Nationally, CoreLogic found that dwelling values fell by -0.8% over the past financial year, the biggest drop since the -0.3% fall in 2011-12. The recent fall is a stark contrast to the 10.2% increase in values nationally over the previous 2016-17 financial year.

These national figures were found to be primarily driven by falling dwelling values in the capitals. 2017-18 was found to be one of only four financial years over the past two decades in which capital city values have fallen, with its -1.6% drop being the largest fall since the -0.3% fall in 2011-12.

The combined regions were found to have grown their dwelling value by 2.2% over the financial year, however this was a much slower rate of growth than the 6.4% the year before – the slowest since 2012-13 when values increased by just 0.9%.

What happened last financial year?

According to CoreLogic, in the 2017-18 financial year:

  • Sydney saw its largest fall in property values (-4.5%) in 20 years.
  • Regional NSW saw the slowest housing value growth since 2012-13 (+3.2%).
  • Melbourne values grew for the sixth consecutive year, though at the slowest rate out of any of those years (+1.0%).
  • Regional Victoria’s markets accelerated, experiencing the greatest increase in values since 2010-2011 (+5.0%).
  • Brisbane also saw value grow for the sixth consecutive year, though at the slowest rate out of any of those years (+1.1%).
  • Regional Queensland’s values barely increased (+0.3%), though it was still the sixth consecutive financial year of rising values.
  • Adelaide’s values increased for the fifth consecutive year, though at the slowest rate (+1.1%) since values fell in 2012-13.
  • Regional South Australia experienced a third consecutive financial year of falling values, though at the slightest rate of decline for these years (-0.1%).
  • Perth values fell for the fourth consecutive year, though the decline was the most moderate of those years (-2.1%).
  • Regional Western Australia saw values decline more steeply (-3.3%) than the previous year, though it wasn’t the steepest in the last six consecutive years of declines.
  • Hobart experienced a slightly smaller increase in dwelling values (+12.7%) on the previous year, though the past two years have seen the strongest growth since 2003-04.
  • Regional Tasmania saw values increase for the fifth consecutive year, though at a marginally lower rate (5.6%) than the previous year.
  • Darwin dwelling values fell for the fifth consecutive year, at a rate of decline (-7.7%) much greater than the previous year, though not quite as great as in 2015-16.
  • Values in the Regional Northern Territory rose (+4.8%), which was an improvement on the previous year, when values experienced a significant fall.
  • Canberra dwelling values increased (+2.3%) more slowly than the previous year, though this makes for four consecutive years of growth, following falls in three of the previous four financial years.

What’s the forecast for next financial year?

According to CoreLogic, the light at the end of the tunnel may not appear any time soon, with many of the factors that led to slowed housing growth in the recent financial year being unlikely to be removed over the coming financial year.

Did you find this helpful? Why not share this news?

Advertisement

RateCity

Money Health Newsletter

Subscribe for news, tips and expert opinions to help you make smarter financial decisions

By signing up, you agree to the ratecity.com.au Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy

Advertisement

Learn more about home loans

What is a valuation and valuation fee?

A valuation is an assessment of what your home is worth, calculated by a professional valuer. A valuation report is typically required whenever a property is bought, sold or refinanced. The valuation fee is paid to cover the cost of preparing a valuation report.

Mortgage Calculator, Deposit

The proportion you have already saved to go towards your home. 

Interest Rate

Your current home loan interest rate. To accurately calculate how much you could save, an accurate interest figure is required. If you are not certain, check your bank statement or log into your mortgage account.

Mortgage Balance

The amount you currently owe your mortgage lender. If you are not sure, enter your best estimate.

Mortgage Calculator, Interest Rate

The percentage of the loan amount you will be charged by your lender to borrow. 

Who offers 40 year mortgages?

Home loans spanning 40 years are offered by select lenders, though the loan period is much longer than a standard 30-year home loan. You're more likely to find a maximum of 35 years, such as is the case with Teacher’s Mutual Bank

Currently, 40 year home loan lenders in Australia include AlphaBeta Money, BCU, G&C Mutual Bank, Pepper, and Sydney Mutual Bank.

Even though these lengthier loans 35 to 40 year loans do exist on the market, they are not overwhelmingly popular, as the extra interest you pay compared to a 30-year loan can be over $100,000 or more.

How personalised is my rating?

Real Time Ratings produces instant scores for loan products and updates them based what you tell us about what you’re looking for in a loan. In that sense, we believe the ratings are as close as you get to personalised; the more you tell us, the more we customise to ratings to your needs. Some borrowers value flexibility, while others want the lowest cost loan. Your preferences will be reflected in the rating. 

We also take a shorter term, more realistic view of how long borrowers hold onto their loan, which gives you a better idea about the true borrowing costs. We take your loan details and calculate how much each of the relevent loans would cost you on average each month over the next five years. We assess the overall flexibility of each loan and give you an easy indication of which ones are likely to adjust to your needs over time. 

Mortgage Calculator, Loan Results

These are the loans that may be suitable, based on your pre-selected criteria. 

What is a redraw fee?

Redraw fees are charged by your lender when you want to take money you have already paid into your mortgage back out. Typically, banks will only allow you to take money out of your loan if you have a redraw facility attached to your loan, and the money you are taking out is part of any additional repayments you’ve made. The average redraw fee is around $19 however there are plenty of lenders who include a number of fee-free redraws a year. Tip: Negative-gearers beware – any money redrawn is often treated as new borrowing for tax purposes, so there may be limits on how you can use it if you want to maximise your tax deduction.

How long does NAB home loan approval take?

The time required to get your home loan from NAB approved can vary based on a number of factors involved in the application process. 

Once you have applied for a home loan, a NAB specialist will contact you within 24 hours over the phone to take down relevant information, including your total income, debts (existing loans, credit cards, etc.), assets (car, shares, etc.), and your monthly expenses (food, utility bills, etc.). Your lender might also ask for information related to the property you want to purchase, including the type of dwelling and preferred postcode.

NAB will then verify all your information and check your credit score, and if the details stack up, you should be given a conditional approval certificate. This certificate stipulates how much money NAB is willing to lend you and is typically valid for 90 days. 

Once you have your conditional approval, you can start browsing for properties that you like and that fit within the budget that NAB has provided. After you find a suitable property, you’ll need to give a copy of the signed deed to NAB, following which you should get full approval and access to the funds. This process can take up to 4-6 weeks. 

What is breach of contract?

A failure to follow all or part of a contract or breaking the conditions of a contract without any legal excuse. A breach of contract can be material, minor, actual or anticipatory, depending on the severity of the breaches and their material impact.

Mortgage Calculator, Property Value

An estimate of how much your desired property is worth. 

Why is it important to get the most up-to-date information?

The mortgage market changes constantly. Every week, new products get launched and existing products get tweaked. Yet many ratings and awards systems rank products annually or biannually.

We update our product data as soon as possible when lenders make changes, so if a bank hikes its interest rates or changes its product, the system will quickly re-evaluate it.

Nobody wants to read a weather forecast that is six months old, and the same is true for home loan comparisons.

Do other comparison sites offer the same service?

Real Time RatingsTM is the only online system that ranks the home loan market based on your personal borrowing preferences. Until now, home loans have been rated based on outdated data. Our system is unique because it reacts to changes as soon as we update our database.