House price falls in Sydney and Melbourne appear to be accelerating and the decline could now be larger than that which followed the GFC a decade ago.
CoreLogic’s hedonic home value index released on Friday showed both cities’ property price falls over the last three months were the fastest since values peaked in October 2017.
Corelogic said national home values were 6.1 per cent down from their high watermark, and were back at October 2016 levels.
But in a separate report, AMP Capital chief economist Shane Oliver said prices had fallen 7.8 per cent from their peak, beating their GFC decline of 7.6 per cent.
He said the data backed the case for the Reserve Bank to cut the cash rate to a fresh record low 1.0 per cent.
‘It’s also a negative for banks and is consistent with our view that the RBA will cut the cash rate to one per cent by year end,’ Dr Oliver said in a statement.
Every capital city aside from Canberra, which recorded a rise of 0.2 per cent, showed a monthly decline in January, according to Corelogic.
Sydney fell 1.3 per cent – and 4.5 per cent over three months – while Melbourne fell 1.6 and 4.0 respectively.
‘Tight credit conditions, weakening consumer sentiment, less domestic and foreign investment and higher levels of housing supply are the primary drivers of the worsening conditions,’ CoreLogic head of research Tim Lawless said.
While capital cities experience heavy losses, the regional markets are healthier, with the combined regional index down just 0.6 per cent over the quarter compared to the combined capitals’ 3.3 per cent.
CoreLogic also estimates there were 12.3 per cent fewer sales over 12 months compared to the previous year.
‘There may be a further dent to confidence as we approach the federal election and housing finance conditions are likely to remain tight after the hand down of the Hayne Royal Commission report which is due on Monday,’ Mr Lawless said.