It's been a not-so-happy New Year for the Sydney property market, with Australia's biggest capital posting yet another fall in dwelling prices.
Sydney apartment values went backwards by 1% over January and houses by 0.8%, according to CoreLogic figures released today. The value of the city's housing market has now retracted by more than 3% since its peak in July last year, following a growth period of more than five years in which property prices surged 75%.
Sydney's weak performance once again brought down the national average, with a monthly fall of 0.5% in dwelling values across the combined capitals. Hobart was the only market to post any growth in January (up 1%), with all other capitals flat or going backwards.
CoreLogic head of research, Tim Lawless, noted that "housing market activity is generally more sedate from late December through to late January; a factor which can contribute towards higher volatility in housing market measurements due to the lower number of observations".
But he also said that despite this seasonal aberration, "we expect to see a continuation of softening conditions across these markets in the absence of a catalyst to reinvigorate the market, such as lower mortgage rates or a loosening in credit policies".
Should Sydney property owners be concerned?
January's weak result "lines up with recent months, which showed a softening trend, particularly in Sydney and, to a lesser extent, Melbourne", according to Lawless.
However, he also observed that "with a history of such strong capital gains, the fall in Sydney housing values to date has been mild and the vast majority of Sydney home owners remain in a strong equity position".
CommSec Senior Economist, Ryan Felsman, agreed. "Over the past nine years both Melbourne and Sydney prices have lifted by around 90 per cent. So any softening in prices needs to be kept in perspective," he said.
Felsman nevertheless warned that "Sydney and Melbourne prices could fall by around 5 per cent over the year [ahead]". He attributed the "modest weakening of home prices" in both cities to "more homes being built [there], thus providing more choice for home buyers".
Hobart is humming
Good news continues to come out of the Apple Isle for property owners. Hobart was once again the only capital to post monthly, quarterly and yearly value growth.
The city's median unit price of $336,263 is now higher than Adelaide's, and while Hobart remains the most affordable capital in which to buy a house, it's closing the gap with Adelaide, Perth and Darwin.
Hobart has also shown the strongest rental growth at close to 10% per annum, and its gross rental yields are second only to Darwin for houses.
Lawless noted that "regional Tasmania is also on a strong upwards trajectory as growth ripples away from Hobart”. The Launceston and North East region was one of the top 10 regional markets for capital gain, up 8.4% over the 12 months to January.