Despite Corelogic’s November House Value Index showing national dwelling values slipped 0.7% in November, the latest Domain forecasts suggest that the next growth cycle is just around the corner. Its predictions are for house price growth to soon recover, increasing by 1% by the end of 2019 and by a further 4% over the year to December 2020.

Domain says low clearance rates, falling home loan approvals and a rising stock of listings suggest prices will continue to fall in the months ahead, and Corelogic indicates it expects house prices to finish the year 4.2% lower than last October’s peaks.

Monthly change in capital city values

Sydney and Melbourne values fell by 1.4% and 1% respectively in November. However, values trended higher across 5 out of 8 capital cities.
 

                                 MONTHLY           ANNUAL
 

Hobart                    0.7%                  9.3%

Darwin                    0.7%                  0.8%

Canberra                0.6%                  4%

Adelaide                 0.1%                  1.4%

Brisbane                 0.1%                  0.3%

Sydney                   0.7%                  8.1%

Melbourne              1%                     5.8%

Perth                      0.7%                  4.2%

Diverse conditions nationally

Although weaker housing market conditions in Sydney and Melbourne are under the spotlight, Corelogic’s head of research Tim Lawless says, “Conditions across the Australian housing market are increasingly diverse. Dwelling values are trending higher across five of the eight capital cities, albeit at a relatively slow pace compared with the previous surge in Sydney and Melbourne. 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”.

Unit prices to bottom in early 2019

According to Domain, Unit prices are expected to bottom out in early 2019 after falling by 3% over the year to December 2018. This will see their values approximately 5% lower than their peak of $568,000 in June 2017. However, prices are then anticipated to grow by 2% in 2019 and 3% in 2020. Two key reasons for this are that unit prices did not ‘run up’ as much as house prices during the boom and stamp duty exemptions will help underpin their prices.

Strongest conditions in key hotspots

The strongest conditions are currently confined to Hobart, Canberra and areas of Brisbane and Adelaide. Over the past twelve months, Hobart dwelling values rose by 9.3%; by far the strongest conditions across any of the capital cities, while Canberra values are up 4.1%.

The remaining top performing capital city sub-regions have all seen annual capital gains at 3.5% or less, highlighting that although values are still rising in some capital city regions, the rate of growth is generally modest.