For those interested in a national property market update, here’s an excellent 7 minute video provided by Justin Fabo, Senior Economist at Macquarie Bank.
The key takeaways are as follows:
• At the national level, property prices are down 6% (Sydney 13%, Melbourne 10%, Perth 17% and Darwin 25%) from peak. Other markets (e.g. Adelaide and Brisbane) have been more stable. Since 2012, even with the recent price falls, Sydney is still up 50%, Melbourne is still up 40%, and at the national level the residential market as a whole is still up over 30%.
• It us unknown when the decline will stop. An overall fall of 10% is expected at the national level… 20% for Sydney, with Melbourne expected to fall ‘peak to through’ either by this same amount, or less. We have already seen some signs that rate of decline is moderating (e.g. pick up in Sydney auction clearance rates, and more positive sentiment).
• Banks are saying they are open for business, and this is true for vanilla deals, but approvals are taking a little longer. There have been reductions of c 20% in borrowing capacity (not that most borrowers go to the maximum), which were apparent more than 6 months ago. There has also been a drop in residential building approvals, although net migration is holding. In 3 to 4 years, we could be talking about affordability issues again, and excess demand.
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