Australian property market update - March 2019

Want to know how the major property markets are performing in each state?

All the talk and headlines are about the downturn, but if you are buying or selling, it's useful to know how each market is tracking - so you can make an informed decision and take advantage of the current conditions. Remember, the property market is as diverse as the number of postcodes, and performance can vary widely within a suburb, city or state.

Thankfully there is a wealth of property and market data out there - including auction clearance rates, days on market, vacancy rates and rental yields, as well as median dwelling values to help in our decision making process.

Let's first take a look at the big picture and what is happening nationally.

National property market update

According to CoreLogic national dwelling values are down -7.4% since the market peaked in October 2017, through to the end of March 2019. Combined capital cities have actually fallen harder than this, down -9.2% over the same timeframe, with regional markets down -2.5%. The two trends here are:

A broadening in the geographic scope of the downturn, which was initially confined to Sydney and Melbourne.  

The rate of decline actually eased in March relative to the past four months, so there is hope the market is over the worst.

Overall, the national property market can be characterised as softening, with values slipping and the pace of growth noticeably slowing in most markets. Despite this, the national index remains 15.9% higher relative to five years ago - so if you have owned property for more than a few years, ideally a lot longer, you are still in a strong position.

Market update: Sydney and regional NSW

Overall, the Sydney market - Australia's largest - is down -13.9% on the peak and -10.9% over the past 12 months. This is the steepest decline in more than two decades.

Dig into the data - particularly days on market - and the slowdown in the big smoke is very apparent, with homes taking an average 74 days to sell in March 2019. A year ago, the same properties would have sold in an average of 33 days.

In terms of median prices, houses are currently at $1.02 million while units are just under the $700k mark.

Regional NSW has been more resilient with values down -4.1% on their peak, and -3.6% over the year to date. Areas bucking the general trend include the Riverina (+5.5%) and Coffs Harbour (+3.5%).

Market update: Melbourne and Victoria

Like Sydney, values are down in the Victorian capital, albeit at a lower rate - having fallen -10.3% from their peak. Houses appear to have fallen harder than units, down -13.0%, while units fell -4.0% from the market peak. In terms of median prices, houses are currently at $809,000, with units in the inner suburbs $504,000.

Despite healthy stock levels, the average selling time in Melbourne has more than doubled from 28 days a year ago to 61 days in the March quarter.

Like many other regional markets, values are only marginally down from their peak, in this case just -0.8%, with Ballarat (+6.6%) and Latrobe (+6.2%) bucking the trend - both up over the 12 months to March 2019.  

Market update: Hobart and regional Tasmania

Sydney and Melbourne may be down, but did you know Hobart has been flying? Hobart and regional Tasmania have all been peaking - the only two major regions to post record gains.

Hobart is up +6.0% over the past twelve months to March 2019, though CoreLogic data for April records a -0.9% decline. This could be the beginning of the end of the boom for this buoyant market - though with a median house price of $452,000 and prices up +3.8 % over the year, investors are still likely to remain interested and active.

There is also a shortage of rental accommodation in the market, so investors looking for low vacancy rates will be sure to find tenants queuing up at the right property and postcodes.

"Sydney and Melbourne may be down but did you know Hobart has been flying?"

Thanks to relatively affordable prices some Tasmanian regional markets have also performed strongly, with property in the South East up +8.5%, and Launceston and the North East posting a gain of +6.9% over the last year.

Market update: Brisbane and regional Queensland

Brisbane housing values recorded a -1.6% drop in prices from the peak, and are down -1.3% over the last year. Units are down -12.2% from their 2010 peak, though rental yields are some of the highest of any capital city - which is great if you are looking for security of tenure.

Like elsewhere selling times have also drawn out to 68 days, up from 38 days a year ago. In terms of median prices, houses are at $563,666 in March 2019, with units at $372,852 - a drop of -0.3% and -5.2% year-on-year respectively.

The historically more volatile regional market has performed slightly worse, with values down -4.9% from their peak. Areas like agriculture dominated Outback Queensland are some of the biggest fallers in the country, down -23.4% over the year to March 2019.

Market update: Canberra and the ACT

The Canberra market has grown +3.1% over the year to date, but levelled off in March. Houses were up + 3.9% over the past twelve months, while unit values were flat. Stock levels are also rising, as is the average selling time - 56 days in the March quarter verses 36 days just a year ago.  The current median house price in Canberra is $722,440 with units at $426,719.

Market update: Adelaide and South Australia

Adelaide has the lowest median house price of any capital city - $460,600, which should help the local market from bottoming out as the city's growing population makes the most of affordable entry prices. The median price of a unit in the city is $312,459 - also a very affordable entry point, particularly for first time buyers. Otherwise there is life in the market with Adelaide's western suburbs growing +1.2% over the year, though overall dwelling values are down a touch at -0.5% since their peak.

It is a mixed picture for regional SA with the south-east of the state posting growth of +2.5%, though parts of Outback SA receded -5.9% over the past year.

Market update: Perth and regional WA

Perth and WA has been in a post-mining boom doldrum, with the housing market down -18.1% since its peak in 2014. This looks set to continue for the foreseeable future, with negative growth for houses and units. The median house price currently at $529,997, with units at $347,596 - with both recording falls of -5.2% and -5.6% respectively year-on-year. If you are selling in Perth, expect your property to take a whopping 72 days to sell, 16 days longer than a year ago.

The picture looks decidedly gloomier for regional WA, where values have fallen some -36% from the market peak in 2014. This includes drops of -18.9% for Outback WA and -13.5% for the Wheatbelt.

Rental market overview

If you are a landlord there is good news. The CoreLogic Quarterly Rental Review (April 2019) found that national weekly rents rose +1% during the first quarter of the year, and by +0.4% over the past 12 months - with rents increasing across all capital cities except Darwin.

Hobart recorded the strongest growth in rents, up +3.6% over the past quarter to $453 per week. Sydney is still Australia's most expensive city to rent in, with a median weekly rent of $582. This is against a national median rent of $436/week. Perth is currently the most affordable capital city to rent in, where tenants pay a median weekly rent of just $385.

"The CoreLogic Quarterly Rental Review found that national weekly rents rose +1% during the first quarter of the year, and by +0.4% over the past 12 months"

In terms of gross rental yields, these have increased to +4.1% nationally, with an average rental yield of +3.8% across capital cities. In contrast, regional markets are higher with yields of +5.1%.

What does all this mean?

With a few exceptions, most analysts are predicting the current downturn to be with us through to 2020. Otherwise current consumer sentiment around housing is being determined by:

• Uncertainty around the upcoming Federal election, particularly if there is a change in government.
• Lending criteria and credit availability, particularly for investor loans but also for owner occupiers.
• The likelihood of a rate cut later in 2019, which would be a positive stimulant for the housing market

If the downturn is producing any winners, it is first home buyers. Until recently they were priced out of the market, but are now able to afford lower valued properties. Active buyers are also in a stronger position as stock levels are still high, but there are fewer people competing for these listings.

If you are thinking of selling, make sure you do it right. A good place to start is our Smart Seller's Guide which can help you sell better, smarter and faster. We can also help you work out how much your home is worth in today's market, which includes a free property report.