Pace of home price falls eases in March: CoreLogic

March’s fall in median prices was the smallest since the housing downturn began, but the impact is spreading beyond big cities.

A property goes under the hammer in Sydney. Pic: Sam Ruttyn

The pace of falling house prices has eased, with the 0.6 per cent drop in March national median housing prices the smallest since values began falling in October, but the malaise has widened, with most cities and regions in the red.

Researcher CoreLogic found housing values fell in six of the eight capitals and five of their seven “rest of state” markets during March.

Head of research Tim Lawless said there were tentative signs that the downturn in values was “losing some steam”.

“Although this is a positive development, the outlook for the housing market will continue to be affected by uncertainty related to the federal election, lending policies and more broadly, domestic economic conditions,” Mr Lawless said.

Housing values in Sydney fell 0.9 per cent for the month and 10.9 per cent for the year while Melbourne prices were down 0.8 per cent for March and 9.8 per cent for the 12 months, Brisbane fell 0.6 per cent and 1.3 per cent annually, Adelaide was down 0.2 per cent and increased 0.8 per cent for the year, Perth fell 0.4 per cent and was down 7.7 per cent annually, Darwin values fell 0.6 per cent and 6.8 per cent for the last year.

Housing prices in Hobart were resilient, increasing 0.6 per cent in March and 6 per cent for the year, while Canberra was also in the black with flat values during the month but a 3.1 per cent lift for the last 12 months.

Across the 46 areas analysed by CoreLogic, seven avoided falls including suburban Hobart and Canberra and regions around Brisbane and Adelaide, while Melbourne’s prestigious inner east saw the biggest value drop over the year of 16.1 per cent, followed by Sydney’s Ryde at a fall of 14.7 per cent.

In both Sydney and Melbourne the top quartile of the market was hardest hit.

Meanwhile capital city rents fell 0.1 per cent over the year to the end of March, the first fall since CoreLogic began recording rentals in 2005.

Tight lending conditions continued to weigh on the market, Mr Lawless said, with housing valuations — an indicator of mortgage activity — down 14 per cent from a year ago.

On the positive side, falling prices had improved affordability and the potential of an interest-rate cut could see mortgage rates at their lowest since the 1960s, he said.

The uncertainty brought by the federal election was amplified not only by a possible change of government, but potential tax changes in winding back the negative gearing break and cutting the capital gains tax discount rate, he said.

“No doubt, some prospective buyers and sellers are delaying their housing decisions until after the election, however, there is no guarantee that certainty will improve post-election, considering the impact of a wind-back to negative gearing and halving of the capital gains tax concession is largely unknown.

“It seems a reasonable assumption that removing an incentive from the market would result in some downwards pressure on activity and prices for a period of time.”

Labor says if it wins government, changes to the capital gains tax discount and negative gearing will take effect from January 2020.