In April 2018, Australian housing loans fell 1.4 percent from a month earlier, the fifth consecutive month of decline, the longest decline since September 2008. It can be seen that Australia`s eastern coast of the real estate bubble shows signs of accelerated contraction.
Sydney`s "leading position" is difficult to guarantee
Across Australia, Sydney`s property market is showing the most significant signs of slowdown. In May, house prices in Sydney fell 4.2% year-on-year. The auction clearance rate also fell to its lowest level since 2016, close to 50%.
Credit tightening is a major contributor to the fall in house prices in Sydney.
We know that the Sydney real estate market is mainly driven by investors. On the one hand, with regulators tightening restrictions on riskier loan products, many investors have been unable to invest in Sydney`s real estate through interest-only loans, leading to a marked slowdown in investment demand. On the other hand, as China tightens controls on cross-border capital flows, many Chinese investors are unable to buy property in Australia because of capital transfers.
At the same time, with household incomes stagnating and debt-to-income ratios as high as 189 percent, there is little chance of further leverage for Australian home buyers. Even for high-income groups, lending capacity has been greatly compromised by banks` increased scrutiny of actual spending levels.
Hobart house prices are no longer cheap!
In the past, Hobart, the capital city of Tasmania, had been a depression for house prices in Australia. Now, with the transformation of market style, Hobart`s house prices are no longer cheap.
In the first quarter of this year, the median price of Hobart single-family homes rose 7.2% from a month earlier to A $492000, according to a new study released by the Australian Real Estate Association (REIA). Overtaking Adelaide`s A $470000, Adelaide took off the hat of "the cheapest capital city in Australia."
Hobart`s house prices have risen nearly 20% over the past year. At the same time, rents are also rising. In the case of a three-bedroom house, the median weekly rent has risen 8.1% to A $400.
Malcolm Gunning, president of the Australian Real Estate Association, said Hobart had succeeded in attracting a large number of Victorian investors and other "lifestyle change" investors. "in the view of many investors, local properties still have relatively good investment value," he said. Many investors buy local real estate to participate in Airbnb (Airbnb) and other sharing platform investment. "
According to statistics, Hobart`s sharp rise in housing prices partly offset the negative impact of falling housing prices in other capital cities. Median home prices in Australia`s capital cities fell 0.1 percent to A $770086 in the first quarter of this year, while apartments fell 0.2 percent to A $593183 in the first quarter, according to statistics.
Further tightening of credit in Sydney and Melbourne, Australia`s two largest real estate markets, could lead to further declines in prices, according to Gunning. At present, under the same conditions, the amount of credit has been significantly reduced compared with 18 months ago.
He said: "interest in bank loans to investors has declined significantly and demand has been suppressed, which in turn has contributed to a fall in house prices."
According to its forecast, eastern coastal cities in the third quarter of this year, home prices may fall by a further 5 / 6%.
