After experiencing the world's longest 50-year "bull market," the once-hot Australian property market entered a downward trajectory in 2018, with bad news arriving continuously. According to The Sydney Morning Herald, the national property market has remained sluggish over the past year, with home prices falling by 4.8% and auction clearance rates repeatedly hitting record lows. Sydney and Melbourne, which previously led the surge, are now at the forefront of the price decline. In Sydney, property prices are the most discussed topic. Data from the firm CoreLogic shows that Sydney's home prices have fallen for more than 12 consecutive months, with an average decline of 6%.
Australian Property Prices Record Largest Decline in a Decade
Since records began, Sydney has been the leader in Australian property prices. Whether you are a first-time homebuyer, a seasoned property investor, a real estate professional, or even a developer, Sydney has historically been the premier destination for investment in Australia. The Australian reported that just a year ago, Sydney's property prices were climbing at an annual rate of 16%. However, throughout 2018, the Sydney property market has been ending its 50-year super-cycle of growth through a soft landing.
"If you look back, Sydney property prices are now 11.1% lower than their 2017 peak. This downturn is the largest decline since February 1990," Tim Lawless, head of research at CoreLogic, told The Australian.
The situation in Melbourne, which stands alongside Sydney, is also not optimistic. Since the end of 2017, Melbourne's property prices have continued to fall, with a 7% decline in 2018.
How long will the decline in Australian property prices last? Australian media are not optimistic about the future of the property market. Local media outlets generally believe the market has "entered winter" and expect it to remain weak throughout 2019. The Australian Financial Review surveyed several economists, including Stephen Koukoulas, who believes the outlook for Sydney property prices is grim, predicting a decline of between 7.5% and 10% in 2019. Economists at Macquarie Securities have provided an even more pessimistic forecast, suggesting that property prices in Sydney and Melbourne could fall by 15% to 20%.
Torsten Sløk, Chief International Economist at Deutsche Bank, recently compiled a list of 30 global market risks to watch in 2019, with the "collapse" of Australian property prices prominently featured.
When prices first began to fall at the beginning of 2018, major "mainstream" media outlets were busy suggesting this was merely a minor price correction and that it was the best time to buy. Now, these same media outlets have shifted their tone, claiming that the Sydney property market is facing a crash, with declines potentially exceeding 40%.