Sydney’s real estate slump will continue for the rest of 2019, pushing home prices down even further, a new report reveals.
Dwelling values were tipped to fall 3.3 per cent for the year, coming on the back of a nearly 6 per cent decline over 2018, according to the forecasts from Moody’s Analytics and CoreLogic.
The declines would not be evenly spread across housing categories, with detached house prices expected to record higher falls.
MORE: Finally, some good news for renters
Where home buyers are getting the best price deals
Unit prices on the other hand were expected to rebound with modest growth for the year.
Moody’s Analytics economist Katrina Ell said detached house prices would drop more because they had risen faster over recent years.
“Peaks and troughs in previous cycles have been steeper for houses, which in part reflects the difficulty in unlocking new supply; conversely, apartment supply tends to outstrip house supply in Sydney,” she said.
CoreLogic’s latest Hedonic Home Value Index showed national dwelling values fell 2.3 per cent over the December quarter.
It was the worst quarter-on-quarter decline since the start of the global financial crisis in 2008.
Weakness in the Sydney market drove much of the decline in the national figures, but Moody’s predicted Melbourne would lead declines for 2019.
Melbourne values were forecast to fall 6 per cent for the year.
Moody’s predicted Brisbane house values would grow 1.2 per cent for the year, driven by strong buying activity in the city’s west and inner areas.
Perth prices will likely decline 2.8 per cent, while Adelaide prices will rise 2.6 per cent.
Moody’s warned that the housing slowdown had implications for the wider economy.
“Given that most of household wealth is in the relatively illiquid asset of housing, there would be greater systematic implications if debt repayment difficulties suddenly become a broader concern,” Ms Ell said.
“If unemployment were to rise, it would force many households to sell at once.”
CoreLogic analyst Cameron Kusher said Sydney’s housing slump was largely the result of tight lending policies from banks.
The policies were narrowing the pool of buyers able to get the necessary financing for their purchases.
MORE: ABC broadcaster buys $10m home
Bizarre legacy of mountain for sale at $1.4 billion
Kanye buys Kim $19m Xmas apartment
Negative sentiment was also playing a part, Mr Kusher said. “Buyers can see there is a downturn, so there is no impetus to jump into the market,” he said. “There could be a feeling from buyers that if they wait prices will be even lower.”