Changes are happening - please bear with us while we update our site.

Changes are happening - please bear with us while we update our site. Click here to give us your advice and feedback.

Here’s Why Sydney House Prices Fell 1.8% In December

CoreLogic has just reported that Sydney and Melbourne house prices fell 1.8% and 1.5% respectively in December 2018.

CoreLogic is reporting that Sydney and Melbourne house prices fell 1.8% and 1.5% respectively in December 2018.

According to the CoreLogic’s December home value index results, national dwelling values were down 2.3% over the December quarter. This was mostly driven by the quarterly 3.9% fall in Sydney and the 3.2% fall in Melbourne.

Other capital city prices didn’t fare well in December either. Perth prices dropped 1%, Darwin prices dropped 1.8%, Brisbane house prices fell 0.2% and Canberra prices were flat. Only Adelaide (up 0.2%) and Hobart (up 0.4%) registered gains.

CoreLogic said that Sydney values are now 11.1% lower relative to the July 2017 peak and Melbourne values are down 7.2% since peaking in November 2017. Sydney values were back to where they were in August 2016, while Melbourne values are back to February 2017 levels.

Why Sydney house prices are Falling

Real estate agents and developers would (and do) pin the blame for the declines on negative news stories by the media and the Royal Commission.

However, the media are only reporting what is happening out there, so I don’t think that’s the issue, unless they are suggesting the declines should be hidden from potential buyers.

The Royal Commission was set up to identify wrongdoing by banks and other financial businesses. It did find a number of things that they were doing wrong.

One of the main talking points was the lack of financial scrutiny on potential borrowers by banks like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC).

Has XYZ borrower reported their actual income and expenses accurately? Can the borrower afford the loan if interest rates were a bit higher? Banks are now asking these questions and digging into the borrower’s finances, which only seems reasonable.

To me it seems the banks are now taking the view that they need to be careful giving out these huge loans for 20 or 30 years.

Other things to Consider

There’s also a long list of other reasons why house prices could be falling: house prices are still unaffordable, interest rates are rising, Chinese buyers are finding it harder to get money out of China, Australian federal and state governments have made it harder for foreigners to buy property, negative gearing may be removed for Australian investors and there is an oversupply of apartments in some cities.

What Now?

Chief economist of AMP Limited (ASX: AMP), Shane Oliver, says 20% falls in Melbourne and Sydney could happen.

With some pundits tipping further falls in house prices, it might be a good idea to consider diversifying by putting some of your money into shares of proven businesses, like the ones in the below free report.

[ls_content_block id=”14945″ para=”paragraphs”]

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Skip to content