Premium Suburbs Feel Price Pinch
Affordability constraints, credit crunches and a flood of listings are affecting growth.
Affordability constraints, credit crunches and a flood of listings are affecting growth.
House prices have fallen across 7% of suburbs in the past three months.
This dip is a contrast to the March peak when just 1.4% posted a decline and according to analysts is the work of a surge in new listings, affordability constraints and tightening credit conditions.
Data from CoreLogic indicates mining towns and some regional markets that experienced the strong upswing earlier in the year have also posted the largest drops.
The volatility in these markets has seen prices slump by 10.3% in South Hedland in WA’s East Pilbara region during the past three months.
House prices fell by 4.7% in Millars Well and Pegs Creek in West Pilbara while units were weakest in West End in Townsville where values fell by 6.6%, East Fremantle in Perth a 4.2%.
However, it’s not an issue isolated to the regions with some of the country’s more premium suburbs feeling the punch.
The high end of the housing market – where dwelling values were about $1 million or more.
Since peaking at 3.5% monthly growth in March, the top 25% of the market by value has slowed to 1.5% through October.
By comparison, the middle market has slowed from 2.2% to 1.7% and the lowest segment 1.5% to 1.3% during the same period.
During the three months ending October house prices in the tony suburbs of Melbourne, including Armadale, Mont Albert and Blackburn posted declines of 0.5%, 0.4% and 0.1% respectively.
In Sydney, Waverley, in the city’s coveted eastern suburbs was the weakest premium market with house prices gaining just 0.7% over three months.
According to Eliza Owen, CoreLogic’s head of research, the slowdown is due to affordability constraints and a glut of listings.
“The volatility at the high end of the market, demonstrated by the rapid decline in growth rates, suggests this segment can also expect a larger downturn in property values.”
“The housing market is well and truly past its peak for the current cycle, and it makes sense that as more headwinds accumulate, price increases will continue to slow, and more suburbs may see an adjustment in price,” she said.
“This comes back to borrowing constraints associated with the increased loan serviceability buffer from APRA, as well as banks proactively tightening lending conditions,” Ms Owen added.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
The construction sector is roaring back to life in some Australian states while others languish in the doldrums
The home building market is on the rebound as building approvals rise, new data reveals.
Information from the Australian Bureau of Statistics shows that the total number of dwellings approved in August was up 7 percent seasonally adjusted, with apartments leading the way.
Private sector house approvals gained 5.8 percent in August while private sector residences excluding houses were up 9.4 percent. This follows on from a decrease of 14.6 percent in July and indicates a solid recovery in the Australian construction sector as the end of the year approaches.
Approvals for total dwellings were strongest in the two largest states, with Victoria recording a rise of 22.2 percent and NSW 12.5 percent. Western Australia also saw a significant rise of 12.3 percent.
In Queensland, the results were less positive for the sector, with total dwelling approvals falling by -26.9 percent. Tasmania also experienced a drop in approvals in August, down -10.1 percent and South Australia -6.9 percent.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual