Sydney house prices down 9.5 percent from peak

More Perth property pain as house prices take another hit in CoreLogic’s latest report

Sydney prices dropped 1.4 per cent in November, bringing the city's total peak-to-trough decline to 9.5 per cent - nearly on par with the previous record fall of 9.6 per cent between 1989 and 1991, when interest rates were in the high teens, unemployment was rising towards double digits and Australia was entering recession.

"For Sydney, 1.4 percent is the biggest monthly fall we've seen so far this downturn", Corelogic head of research Tim Lawless told AFR.

The city's largest downturn on record was in the recession between 1989 and 1991 and Lawless says it is likely that Sydney will "set a new record in terms of the magnitude of price decline and the length of decline".

Unit values tripped by 0.6 per cent and are now down by 5.5 per cent since the start of 2018.

Sydney saw the steepest fall in prices with a 1.4% drop, bringing the cities overall decline to 9.5% over the past financial year.

"Conditions across the Australian housing market are increasingly diverse", he said.

A tightening of credit is the biggest factor weighing on the market, with banks winding back riskier lending - making it harder for investors - and becoming more stringent on verifying income and expenses, thus reducing the amount people can borrow.

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"Additionally, housing affordability constraints are more pronounced in these markets and rental yields are substantially lower, indicating an imbalance between rental values and dwelling values", he said, adding that the boost in housing supply has been more pronounced in these markets against a backdrop of slowing demand.

"We expect headwinds for tighter credit will continue for the foreseeable future and will continue to temper housing market activity", he said.

But the situation is deteriorating even more quickly in the key Sydney and Melbourne markets.

With so many homes now up for sale in these cities, the recent pick-up in price declines suggests some vendors are choosing to lower their price expectations in order to secure a sale before a seasonal slowdown in market activity over summer months.

The good news in light of this statistic is that Australia now has record lows when it comes to interest rates, with unemployment hovering around the 5% mark, and general economic growth occurring.

However, unit values are now falling across more centres. "Hobart and regional Tasmania continue to be the standouts for capital gain, with values up 1.7% across both regions over the past three months".

This story first appeared in Business Insider.

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