Australian Housing Market Is Indeed Struggling: What You Need to Know

  • Oct 25, 2018 AEDT
  • Team Kalkine
Australian Housing Market Is Indeed Struggling: What You Need to Know

The housing prices in Australia are not in a good shape as we have already seen that the mortgage lending commitments have witnessed a steep fall in the month of August. This was witnessed because of the fall in the owner-occupier loans which had further led to the decline with respect to the investor credit. The housing loans have not been in a good shape lately. However, in the September 2018 quarter, the fall in the house prices is much more stepper in Melbourne than in Sydney. In September 2018 quarter, the decline in the Melbourne’s housing prices was of 3.9%. Nationally, the decline in the house prices was 2.6% whereas the units fell 1.6% in the September quarter.

As per the analysts, the houses which are being priced in the middle to the upper range are the ones which are getting impacted because of the downturn which is currently being witnessed in the housing market. However, a large number of the first home buyers have been creating strong competition among the houses which are priced in the lower end. The housing prices in Sydney has seen a fall of 3.1% in the September quarter which makes up a total decline of 6.5% in the past twelve months. However, the housing prices in Hobart has been witnessing an uptrend. In this city, the prices experienced an increase of 3.7% in the September quarter and therefore, annual uplift clocked in at 19.3%. As per the analysts, Melbourne was in a better position when compared to Sydney because the former is an owner-occupier market and as such was not much exposed to the ongoing investors’ activity. 

The top management of Market Economics stated that the substantial decline in the housing prices in the September quarter in Melbourne was in line with the weaker auction clearance rates and that he had expected a further drop. The management also stated that because of the higher population growth in Victoria as compared to Sydney, the housing prices were marginally helped. Not so long ago, AMP Capital has decided to reduce its outlook with respect to the housing market. It has now anticipated a peak-to-trough fall of 20% in regard to Melbourne as well as Sydney. Apart from the low auction clearance rates, the primary factor which has been impacting the housing prices is the tighter lending procedures.

The apartment owners in Perth were also witnessing the negative impact as the values declined by 7.1% in the September 2018 quarter. According to the top management of Market Economics, the decline in the prices in Perth was indeed unexpected as, compared to rest of the country, Perth has encountered a fall in the construction. They added that the expectations were that the decline in the unemployment levels, as well as robust momentum in the population, would help in capping the fall in the housing prices. However, the lower-than-expected growth rate was in line with the falling credit which has adversely impacted the broader housing market.


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