Sydney house prices fall for the first time in nearly 3 years

“Generally weaker capital city house price growth over the September quarter is reflected in the national results,” said Domain’s chief economist, Dr Andrew Wilson.

“House price growth is expected to continue to ease in most capital cities over the remainder of the year, although the underlying drivers remain positive.”

Following from last quarter’s report, Hobart and Canberra proved to be the best capital city for rental yields for houses at 5.29 per cent over the quarter and for units at 5.77 per cent respectively.

In terms of rental vacancy rates, aside from Brisbane and Perth, every capital city have vacancy rates for both houses and units at less than 2 per cent, indicating a lack of supply and the trend of turning permanent rental properties into holiday accommodation.

Here’s a quick breakdown of each of the capital cities:

Sydney – declining

Median house price: Down 1.9 per cent over the quarter to $1,167,516

Median unit price: Down 0.8 per cent over the quarter, up 4.5 per cent over the year, to $732,321.

Median house rents: Steady over the quarter, up 3.8 per cent over the last year, to $550 per week

Median unit rents: Steady over the quarter, up 4.8 per cent over the year, to $550 per week.

“The drop in Sydney’s house prices over the September quarter reflects the diminishing impact of the record-low interest rates that have fuelled [the] market recently. While Sydney’s property market has been the star performer nationally – with prices essentially doubling over the last five years – affordability barriers are now acting to slow down demand and moderate price increases,” Dr Wilson said.

“The significant decrease in investor activity, as well as tightened lending restrictions for residential investors, has had a clear impact on the Sydney market.

“We saw a similar house price dip in 2015, when similar policies were introduced. Despite recording a decline in both house and unit prices, Sydney clearly remains the highest priced of all capitals, well ahead of the next highest, Melbourne.”

Melbourne – rising

Median house price: Up 1.3 per cent over the quarter, up 13.9 per cent over the last year, to $880,902.

Median unit prices: Up 3.4 per cent over the quarter, up 11.4 per cent over the last year, to a new record of $506,334.

Median house rents: Steady over the quarter, up 5 per cent over the last year, to $420 per week.

Median unit rents: Steady over the quarter, up 5.3 per cent over the last year, to $400 per week.

“This period of growth marks the [20th] consecutive quarter of house price growth for Melbourne. While house prices continue to grow at a steady rate, unit demand is soaring. The latest growth figures are further indication that demand is significantly ahead of supply,” Dr Wilson said.

“In terms of the rental market, despite remaining steady over the September quarter, Melbourne’s rents have increased significantly over the last 12 months – up 5 per cent from the same time last year.

“With policies in place to further restrict investors, it’s likely that rental prices will continue to rise, with fewer properties available.”

Brisbane – declining

Median house prices: Down 0.2 per cent over the quarter, up 3.8 per cent over the year, to $551,840.

Median unit prices: Down 3.5 per cent over the quarter, down 6.5 per cent over the last year, to $376,685.

Median house rents: Steady over the quarter and the last year to $400 per week.

Median unit rents: Steady over the quarter, down 1.3 per cent over the last year, to $370 per week.

“The slight drop in house prices is in line with Brisbane’s subdued housing market over the last 12 months, while the drop-in unit prices is evidence that unit supply in the local market has officially outstripped demand,” said Dr Wilson.

“The median unit price is sitting at the lowest in three years, and it’s expected that unit prices will only continue to decrease.”

Adelaide – rising

Median house prices: down 0.3 per cent over the quarter, up 4.1 per cent over the last year, to $519,517.

Median unit prices: Up 1.6 per cent over the quarter, up 2.6 per cent over the last year, to $313,074.

Median house rents: Steady over the quarter, up 2.9 per cent over the last year, to $360 per week.

Median unit rents: Up 1.7 per cent over the quarter to $295 per week.

“Second only to Hobart, Adelaide has one of the most affordable median house prices of all capital cities, and the most affordable median unit price,” Dr Wilson said.

“Despite experiencing a drop in median house price over the quarter, the solid local market provides investors with growing confidence as it continues to deliver resilient results.”

Perth – declining

Median house prices: Down 1.3 per cent over the quarter, down 2.3 per cent over the year, to a five-year low of $554,095.

Median unit prices: Down 6.7 per cent over the quarter, down 7.7 per cent over the year, to $351,875.

Median house rents: Down 2.8 per cent over the quarter, down 7.8 per cent over the year, to $350 per week.

Median unit rents: Steady over the quarter, down 6.3 per cent over the last year, to $300 per week.

“After dropping consecutively for three quarters, the median house price in Perth has now reached the lowest recorded by the local market in five years,” said Dr Wilson.

“As the market continues to weaken, house rents in Perth are now the most affordable of all capital cities.”

Canberra – rising

Median house prices: Up 4.3 per cent over the quarter, up 10.5 per cent over the last year, to $723,980.

Median unit prices: Up 1.9 per cent over the quarter, down 0.5 per cent over the last year, to $427,391.

Median house rents: Up 1 per cent over the quarter, to $505 per week.

Median unit rents: Steady over the quarter, up 5 per cent over the last year, to $420 per week.

“After relatively subdued periods of activity in recent months, Canberra is in catchup mode – bucking the trend of most capital cities and recording increases in rents and house prices,” Dr Wilson said.

“House price growth in the city is expected to continue, given the strong migration to the area and the undersupply of houses.”

Hobart – rising

Median house prices: Up 4.4 per cent over the quarter, up 14.8 per cent over the last year, to $409,592.

Median unit prices: Up 6.3 per cent over the quarter, up 25.6 per cent over the last year, reaching a record high of $323,174.

Median house rents: Up 4.2 per cent over the quarter, up 13.6 per cent over the year to $375 per week.

“Strong migration and undersupply in the property market is driving strong price growth in Hobart,” said Dr Wilson.

“For investors, Hobart is currently providing the best gross rental yields of all capital cities, with 5.29 per cent recorded in the September quarter.

“The local market is confident and the boom-time results are showing no sign of slowing down.”

Darwin – declining

Median house prices: Down 3.6 per cent over the quarter, down 2.8 per cent over the last year, to $593,329.

Median unit prices: Down 6.8 per cent over the quarter, down 30.5 per cent over the last year, to $330,354.

Median house rents: Steady over the quarter, down 5.5 per cent over the last year, to $520 per week.

Median unit rents: Steady over the quarter, down 5.9 per cent over the last year, to $400 per week.

“The drop of 30.5 per cent in median unit prices year-on-year is indicative of the oversupply of apartments in the city,” Dr Wilson said.

“This same oversupply is highlighted by the annual decrease in median rental prices and is expected to continue until demand and supply are rebalanced.

“Unfortunately, policies that are designed to restrict investor lending are also impacting those apartment markets where supply is already well ahead of demand.”

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