Australian home prices mark worst year since 2008 By Reuters

© Reuters. FILE PHOTO: New homes line a street in the Sydney suburb of Moorebank in Australia

SYDNEY (Reuters) – Australian home prices skidded nearly 5 percent in 2018, marking their worst year since 2008, led by tighter credit conditions and waning investor interest, and analysts expect the weakness to persist this year.

Property values across the country fell for the 15th consecutive month in December, with the rate of decline in Sydney and Melbourne – the two largest markets – worsening over the year, according to property consultant CoreLogic.

Its index of home prices nationally dropped 1.8 percent in December from November, and tumbled 2.3 percent for the quarter – the worst quarterly decline in eight years.

Values in the combined capital cities fell 1.3 percent in the month and 6.1 percent for the year. Sydney was the worst performing capital city with prices down 1.8 percent in December.

Regional centers fared better with prices outside the cities staying almost flat.

“Access to credit has been the most significant factor weighing down housing market conditions over the year,” said Tim Lawless, head of research at CoreLogic.

Since 2015, regulators have clamped down on risky lending by banks, particularly for interest-only loans, while a raft of scandals amid a high-level government-mandated inquiry has added to an air of caution.

Earlier this year, Australia’s prudential regulator did ease some of its lending restrictions, but Lawless said access to finance was likely to remain “the most significant barrier” to an improvement in housing market conditions in 2019.

“Lenders are understandably risk-averse against a backdrop of falling dwelling values, high household debt, rising supply and heightened regulatory focus following the banking royal commission inquiry,” he said.

The slowdown has been greatest in Sydney where home prices stumbled nearly 9 percent on the year, though Melbourne was catching up with an annual drop of 7 percent.

Sydney and Melbourne comprise about 60 percent of Australia’s housing market by value and 40 percent by number.

Rental market conditions were also generally subdued, with weekly rents unchanged over the year across combined capital cities. Falling house prices, however, have boosted rental yields, particularly in Sydney, Melbourne and Perth.

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Source link Finance News Australia

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