In January 2017, CoreLogic’s monthly Home Value Index showed property prices across the country’s capital cities had risen 10.7 per cent year on year.
However, the latest index reveals annual gains have more than halved to 5.2 per cent. Are homes becoming more affordable? And will 2018 see further declines?
Real estate prices plateau
The CoreLogic data indicates price growth is currently slowing, but it remains in positive territory. In other words, prices are still increasing, just at a slower rate than before.
Nevertheless, capital city home values edged upwards just 0.2 per cent in the three months to November 30 when compared to the previous quarter. Month to month, capital city prices actually fell 0.1 per cent.
Most analysts are focusing on Sydney, where prices dropped 0.7 per cent between October and November, to gauge whether a downward trend will continue.
“Softer housing market conditions across Sydney, which comprises roughly one-fifth of national dwelling stock (and approximately one-third by value), has a material influence over the headline growth trends,” said Tim Lawless, head of research at CoreLogic.
What does this mean for the future?
Predicting the future is always difficult, but UBS has forecast that the Australian housing boom is officially over. George Tharenou, an economist at UBS, said in a recent report that a “persistent and sharp slowdown” is currently unfolding, with a Sydney-led market downturn the most likely result.
This could be an encouraging development for people hoping to purchase property in the new year. Research from ME Bank showed that even some homeowners are hoping for values to plummet, despite the impact this could have when selling their property.
Nearly one-quarter of owner-occupiers and 20 per cent of property investors said they wouldn’t mind a market correction.
“That property owners were willing to see asset values fall is a sure sign house prices had reached heights many think are unfair,” said Patrick Nolan, ME Bank’s home loan expert.
Is now the time to find a broker?
Only time will tell if property prices will fall in 2018, but several signs are already indicating that value increases are decelerating and will continue to do so. If you’re considering buying a new home next year, contact us today to find the right mortgage deals for you.
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