Australian home values have dropped for a seventh consecutive month and capital city values have had their first annual drop since 2012, according to the April CoreLogic Home Value Index.
But the market should experience a ‘soft landing’, led in part by strong regional results, the report said.
“The latest trends are virtually the opposite of what we have become used to over the past five or so years. Regional areas are now outperforming the capitals and units are outperforming houses. Also the most expensive properties are now showing weaker conditions than the more affordable ones,” said Tim Lawless, CoreLogic head of research.
Regional areas outperforming metro cities
Regional home values were up 0.4% over the past month, compared with combined capital city values that dropped by 0.3%.
Annually, regional prices have grown by 2.4%, while the combined capitals have fallen by 0.3%.
Sydney and Melbourne prices still softening
Sydney and Melbourne prices each declined by 0.4% in April. Sydney’s home values are now 3.4% lower than this time last year, while Melbourne’s growth has slowed to 3.7%.
“Sydney dwelling prices rose around 75% between early 2012 and mid-2018. So with that perspective, the current cooling looks quite mild,” said economists at online broker CommSec.
Units stronger than houses
Nationally, units outperformed houses. Units increased by 2%, while houses dropped 0.3%. Regionally, units and houses each grew by 2.4% over the past year, while in the combined capital cities, units grew by 1.9%, while houses dropped by 1%.
Expensive properties hit hardest
The most expensive 25% of properties in Sydney have decreased by 6.3% in value over the year, while the cheapest 25% have increased by 0.5%, according to CommSec. In Melbourne, the most expensive properties have increased 0.6% over the year, while the cheapest have increased by 11.7%.
“Rising house prices combined with soft real wages growth means there is greater demand for cheaper properties,” said CommSec.
Median home values
In April, the median value of a home in the capital cities was $655,419. Regionally, it was $364,706.