Lower volumes and tighter mortgage requirements are likely to constrain price growth this year, says CoreLogic.
An estimated 339,026 houses and 132,081 units were sold nationally in the 12 months to April 2016, according to CoreLogic RP Data's Property Pulse report. The result for houses was down 3.7% for the year, and for units was down 9.7% for the year.
The proportion of sales that were in capital was the lowest since January 2013, reflecting the growing trend of buyers moving out of the cities to find better value. Of all house sales, 61.5% were in capital cities, and 72.8% of unit sales were in capital cities.
Most cities are seeing weaker sales volumes. But cities that have recorded price falls are beginning to observe signs that the market could be correcting, as volumes flatten out.
Research analyst with CoreLogic RP Data, Cameron Kusher said, “While Perth and Darwin are the two cities where values fell over the past year, the trend line suggests that the rate of decline in sales is starting to flatten. This change could indicate that the worst of the value declines have been experienced and a level of demand is now returning to the market.”
“It is difficult to gauge exactly how strong the downwards trend is in Sydney, Melbourne and Brisbane given how many units are under construction," said Kusher. "Affordability constraints, particularly in Sydney and Melbourne, following consistent value growth in recent years, is likely leading to a decline in sales,” he said.
While Adelaide, Hobart and Canberra are seeing transactions trend slightly lower in recent months, the trend is not as strong as that in Sydney and Melbourne.
Kusher said, “This trend suggests a fairly steady demand in each of these cities and is reflective of their moderate increases in home values currently.”
Sales volumes peaked at 633,904 transactions in the 12 months to May 2002. Only 471,107 sales were recorded over the past year, a decline of 25.7% from the 2002 peak.
Kusher said, “The high costs associated with exiting a property such as agent commissions, and stamp duty at point of purchase, are both likely to be major deterrents to an increased level in sales activity.”
Kusher said that the population was 19.5 million in June 2002, and is now 24.1 million, but transaction volumes are still down significantly on the levels recorded in 2002.
“With fewer transactions in the market and tighter mortgage lending conditions, we’re expecting to see less upward pressure on home values as we progress through 2016.”