Sydney drops below million-dollar median
House prices fell in every capital city except Melbourne and Hobart this quarter, while unit prices also fell across the board following a record number of apartments being built in most capitals – according to the March Quarter Domain House Price Report.
Domain chief economist Andrew Wilson attributes weakening economic activity and growing uncertainty to affecting fragile consumer and investment sentiment, leading to falling house and unit prices in most capital cities.
“The outlook for house prices remains subdued, with capital city growth likely to continue to track at best just above the inflation rate for the remainder of 2016,” he says.
“The prospect of weaker house price growth, however, will be welcomed by prospective first homebuyers still struggling to get into the market.
“The national median has now fallen over two consecutive quarters for the first time since June 2011 as the general housing market correction consolidates.”
Onthehouse.com.au’s Eliza Owen believes the outlook for 2016 will see most of our major markets move into downswing, “whether that’s in the form of lower rates of positive growth, or negative growth”.
“Historically, housing market cycles have followed Sydney but at a slight lag,” she says. “Sydney has been in a cyclical upswing since late 2012, and peaked in late 2015, so it’s no surprise that after such exorbitant house price increases, Sydney should be moving into downswing.
“Markets that are still going up at the moment are probably doing so because they lag behind the Sydney market.
“Smaller markets, such as Canberra, Hobart and Darwin, may be more responsive to economic shocks this year simply because of their size and lack of economic diversity.
“Things such as LNG prices, government public service provisions and tourism are such factors that could influence these markets.”
The key findings in the March Quarter Domain House Price Report are:
- Sydney’s median house price drops below $1 million as unit medians also fall.
- Melbourne house prices still rising with the strongest result over the year
- House and unit prices are down in Sydney, Brisbane, Perth, Canberra and Darwin.
- Adelaide was the only capital not to record a decline in unit prices across the quarter.
- Hobart house prices continue to surge but remain the most affordable Australian capital city.
Capital city overview
Sydney’s median house price fell again over the March quarter, recording a 1.5 per cent drop down to $995,804. Sydney’s unit prices also fell for the second consecutive quarter, down by 0.7 per cent to $656,166.
Despite both experiencing declines over the March quarter, Sydney house prices increased by 6.9 per cent over the year while unit prices rose by 5.8 per cent.
Wilson warns that “any price growth [is] unlikely before spring”.
Melbourne was the only mainland capital to buck the trend of falling house prices, recording an increase of 1.2 per cent over the March quarter, reaching a median of $726,962. Melbourne house prices increased by 11.8 per cent over the year ending March, the strongest result of all the capitals.
Melbourne unit prices fell by 1.7 per cent over the March quarter to $444,370 for an annual increase of 3.8 per cent.
“Melbourne has now overtaken Sydney as the fastest growing capital city housing market in Australia… [and] has recorded 14 consecutive quarters of house price growth, the longest sequence since June 2008,” Wilson says.
Brisbane house prices fell marginally over the March quarter for the first decrease since the September quarter 2014, with a median price of $512,809. Brisbane unit prices were also down over the quarter, falling by 0.8 per cent to $367,058. Across the year, Brisbane house prices increased by 4.1 per cent with unit prices falling by 3.2 per cent.
Adelaide’s housing market reversed its consistent growth performance of last year with the median house price falling by 0.5 per cent to $491,422. Unit prices were steady over the March quarter with a median of $303,537, making Adelaide the only capital not to experience a decline this quarter. Unit prices increased by 2.2 per cent over the year with house prices up by 3.4 per cent.
Perth – the revival of Perth’s house prices was short lived, with the median falling by 1.3 per cent over the March quarter to $579,914. The weaker result followed an increase over the previous December quarter, which was the first rise in a year. Perth house prices fell by 4.7 per cent over the year ending the March quarter, which was the strongest decline of all the capitals. Unit prices decreased by 3.7 per cent to $379,975 and have fallen by 5.1 per cent over the past year – the sharpest annual decline since December 2011.
Hobart house prices continue to rise strongly, with the median increasing by 4.3 per cent over the March quarter to $360,212. The March result follows the 3.5 per cent increase recorded over the previous December quarter, with annual prices now up by 7.6 per cent – the second best performance of all the capitals. Hobart unit prices fell sharply by 6.2 per cent over the March quarter to $251,633 for a fall of 3.3 per cent over the year.
“Despite further likely rises, Hobart remains the most affordable Australian capital city,” Wilson says.
Canberra house prices fell over the March quarter following five consecutive quarters of growth. The median house price decreased by 1.4 per cent to $638,696 but has increased by 4.8 per cent over the past year. Canberra unit prices reversed the rise of the previous quarter, falling by 2.8 per cent to $400,637 for an annual decrease of 4.7 per cent.
“An oversupply of new apartments is affecting unit prices in Canberra. A rebound in Canberra house prices will be dependent on the performance of the local economy with all eyes as usual on the upcoming federal budget,” Wilson says.
Darwin house prices fell sharply over the March quarter, down by 4.9 per cent to $610,305 and the third consecutive quarter of falling house prices. Unit prices were also down over the quarter, decreasing by 4.1 per cent to $448,416. House prices have declined by 3.3 per cent over the past year with unit prices down by 8.3 per cent – the weakest performance of all the capitals.
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