Australia: Sharp slide in dwelling prices continues - Westpac

Matthew Hassan, analyst at Westpac, points out that Australia’s CoreLogic home value index, covering the eight major capital cities, fell a further 1.2% in Jan following a 1.3% decline in Dec and a 0.9% fall in Nov, suggesting that the Australia's housing market correction broadened and accelerated through late 2018 and very early 2019.

Key Quotes

“Prices nationally are down 6.9%yr and are now 7.8% below their Sep 2017 peak, eclipsing the (much slower) 2011-12 price correction but still milder than the price fall during the GFC.”

“While the result is for the first month of 2019, in practise it speaks more to the extent of weakness in late 2018. Markets are essentially closed from late Dec through to early Feb with turnover typically 25-30% below average (possibly lower given current market conditions). This pattern also generates some seasonal price weakness as sellers outnumber buyers although the effect is marginal – adding about 0.3ppts to monthly declines – and does not detract what is an unambiguously weak picture over the last 3mths.”

“More generally, the spread of weakness across price tiers and geographies has continued to widen. Our estimates suggest about 80% of all dwellings (by share of dwelling stock) have recorded price declines over the last 6mths with 70% recording annual price declines. Around 40% of properties are experiencing annual price declines of over 5%yr, with closer to 60% in NSW.”