Melbourne and Sydney push house prices to their fifth straight month of decline

author-avatar By on October 01, 2020
Melbourne and Sydney push house prices to their fifth straight month of decline

Photo by Liam Pozz on Unsplash

Although house prices were much improved in September, Melbourne and Sydney pushed the national index down by 0.1%.

That's according to data from CoreLogic, which found prices improved in every other capital in the month, but with Sydney and Melbourne accounting for 40% of housing stock by number and 55% by value, national prices fell to their fifth straight month of decline. 

Darwin posted the strongest growth in September with prices up 1.6%, followed by Adelaide (0.8%) and Brisbane (0.5%), while Sydney's rate of decline has been steadily easing since July. 

Looking to compare low-rate, variable home loans? Below are a handful of low-rate loans in the market.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^

Rates correct as of October 27, 2021. View disclaimer.

CoreLogic head of research, Tim Lawless, said Melbourne remains the main drag on the headline results. 

“By far the weakest result across the capital cities, Melbourne housing values were down 0.9% in September," Mr Lawless said.

"Since peaking in March, Melbourne values are down 5.5%. With restrictions starting to lift and private home inspections once again permitted, we expect to see activity lift in October.”

Change in dwelling values as at September 30, 2020

 

Month

Quarter

Annual

Median value

Sydney

-0.3%

-1.6%

7.7%

$859,943

Melbourne

-0.9%

-3.3%

3.1%

$666,796

Brisbane

0.5%

0.0%

3.8%

$504,902

Adelaide

0.8%

0.9%

3.6%

$449,803

Perth

0.2%

-0.3%

-1.0%

$445,717

Hobart

0.4%

0.3%

6.4%

$489,059

Darwin

1.6%

2.3%

1.9%

$398,885

Canberra

0.4%

1.5%

6.3%

$644,581

Combined capitals

-0.2%

-1.5%

4.9%

$635,196

Combined regionals

0.4%

0.5%

4.3%

$397,791

National

-0.1%

-1.1%

4.8%

$554,372

Source: CoreLogic 

Regional markets have continued to outperform their capital city counterparts, with combined regional prices only falling 0.8% since March, while the capitals have fallen 2.6% in the same time. 

Mr Lawless said regional markets had held up better as they hadn't seen the same growth as capitals prior to COVID, and were now beneficiaries of a capital city exodus combined with working from home arrangements.

"Anecdotally we are also observing a transition of demand away from the cities towards the major regional centres, particularly those that are adjacent to the larger capitals where residents can commute back to the cities if required," he said.

"Remote working arrangements are no doubt a factor in supporting demand in these markets, but lifestyle opportunities and a desire for lower density housing options are also playing a part.”

What's driving the rebound in prices? 

Mr Lawless said the housing market still faced the challenges of a weak labour market, reduced fiscal support, and less mortgage deferrals, but a number of factors were supporting market conditions. 

“The aggregate effect of low mortgage rates, and the prospect that rates could fall further, low inventory levels, government incentives and improving consumer sentiment seems to be outweighing the negative economic shock brought about by the pandemic, “ Mr Lawless said.

Additionally, low advertised stock is creating urgency in the market when demand is still recovering. 

"While the number of advertised homes is 14% lower than a year ago, our estimate of home sales through the September quarter was 2.8% higher than the same time last year.

"The imbalance between available supply and housing demand is one of the reasons why housing values have hardly fallen through the COVID period so far, and helps to explain the recent upwards trend in values across some cities.”

Mr Lawless also said there hadn't been the expected rise in distressed listings or stock piling up in the market, with new listings being absorbed faster than the rate at which they're being added. 

House rents and unit rents a stark contrast 

The rental markets has diverged substantially between house and unit rents, with national house rents up 0.4% between the end of March and September, while units rents are down 3.3% in the same period. 

Sydney and Melbourne house rents are down 1.3% and 1.0% in that time respectively, while unit rents have fallen 5.0% and 5.5% respectively.

Mr Lawless said the significant difference in rental performance is a combination of supply and demand side factors.

“Investment grade apartment markets have seen significant supply additions over the past decade, with a large portion of new apartments built in Sydney and Melbourne," he said.

"The supply side has been further impacted by short term rentals transitioning to long term rentals. While supply has surged, COVID-19 brought about a significant demand shock from international and state border closures.

"Overseas migrants comprised a material component of tenant demand across inner Melbourne and Sydney, with many of these foreign students.”

Additionally, Mr Lawless said people in hardest hit industries like hospitality and retail, and the arts, are more likely to rent, which also negatively impacted rental demand. 


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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