In 2018, the real estate markets in Australia performed very poorly with housing market prices falling significantly during the period. As per recent market speculation, the year 2019 is not going to be any relief for the housing market as it is estimated that the real estate markets could face a further decline in 2019.
As per the Australian Bureau of Statistics, in the September quarter of 2018, the residential property prices have fallen by 1.5 percent as compared to the June quarter of 2018. The Weighted average of eight capital cities has fallen by 1.9 percent in the September quarter as compared to the corresponding period of 2017.
Australia’s largest and most expensive housing markets Melbourne and Sydney have both experienced fall in their property prices. Melbourne’s property prices have decreased by 2.6%, and Sydney’s property prices have dropped by 1.9 percent in the September quarter of 2018 as compared to June quarter of 2018.
At the end of the September quarter of 2018, Australia’s total value of residential dwellings was $6,847,057.2 million which is $70,148.6 million less than the June quarter of 2018. Further, the mean price of residential dwellings decreased by $9,700 to $675k, and the total number of residential dwellings increased by 40,900 to 10,143,700 in Q3 2018 as compared to the Q2 2018.
According to the Chief Economist for the Australian Bureau of Statistics Mr. Bruce Hockman, the decrease in the property prices of Sydney and Melbourne are no longer confined to the more expensive properties, as middle and lower segments of the housing market are also witnessing the decline in their prices.
Further, the tightening of credit availability and falling property prices are creating additional pressures on the shoulders of both investors and owner-occupiers. Many economists believe that the main reason behind the decline in the housing prices is the increased regulations by the Australian banks which have impacted the investors borrowing behavior.
Due to the crackdown by Australian Prudential Regulation Authority (APRA) on Investor lending, the banks have further tightened their lending policies. APRA has told Australian banks to limit interest-only lending to 30% of new mortgages which has further contributed to the downfall of the Australian housing market. Due to the tighter credit conditions, many regions in Australia have reported weaker housing market results.
The Australian Housing market has already witnessed a record fall in 2018, and many economists are suggesting the prices may fall further which could turn the situation for bad to worse.
Investors are currently eying on the 2019 Australian federal election which is scheduled to happen in May 2019 as there could be changes in the taxation policy if a new government is elected.