Sydney's house price falls accelerate in November, expert tips 15% fall in total

Will property prices crash in 2019?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It seems there's no light at the tunnel for Australian house prices with The Australian newspaper this morning reporting some more negative house price data for the month of November revealed by property analytics business CoreLogic.

According to the data revealed in the newspaper Sydney just recorded its worst monthly fall in house prices in 14 years, with prices down 1.3% in the city over November. On an annualised basis that would mean falls of another 15.6% in the year ahead unless the city reverses the slump.

In total CoreLogic has Sydney prices as now down 9% from their July 2017 peak, with most other data providers estimates likely to now be in the high-single-digits as well.

CoreLogic is now also tipping Sydney's house prices to fall 15% from their 2017 peaks.

Melbourne and Perth also saw prices in November fall 0.9% and o.6% respectively, while Brisbane grew 0.1%, with Adelaide flat.

The flat or falling house prices are being blamed on a number of factors including a 'credit crunch' that is seeing major lenders such as the Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) lend less to owner occupiers and investors.

This is for a number of reasons including regulatory restrictions in the case of investors and tighter checks on an applicant's income and expenses in the case of owner occupiers.

Logically, the less a property buyer can borrow, the less they can afford to bid for a property.

Other factors being blamed are affordability (in the case of Melbourne and Sydney), weak wages growth, and the lack of foreign buyers in states like NSW since the state government imposed significantly higher 8% surcharge taxes on overseas investors.

Rents are also falling in Sydney for example, which means the smarter or more professional investors will be adjusting down their assessed values of properties.

If house price falls continue through 2019 in Sydney and Melbourne the damaging effect on confidence and consumer spending could flow through to discretionary retail stocks.

Already shares in the likes of Super Retail Group Ltd (ASX: SUL) have tumbled in the past year. While the chairman of star retailer Premier Investments Limited (ASX: PMV) told investors he has been closing apparel stores on major urban shopping thoroughfares as landlords were no longer realistic about rents given the worsening retail environment.

However, it's big bank investors who should keep the closest eye on any signs of a crash in the property market in 2019 as this could take banks' share prices down with it.

Motley Fool contributor Yulia Mosaleva owns shares of Commonwealth Bank of Australia. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia owns shares of Super Retail Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Doctor doing a telemedicine using laptop at a medical clinic
Healthcare Shares

3 small-cap ASX healthcare shares 'with strong prospects'

Fund manager IML discusses why these 3 ASX healthcare shares are likely to rise in value.

Read more »

Magnifying glass on a rising interest rate graph.
Share Market News

Will the RBA finally cut interest rates next week?

Let's see what economists are saying about the central bank's meeting.

Read more »

A couple sits on a sofa, each clutching their heads in horror and disbelief, while looking at a laptop screen.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors endured a rough Friday to close the trading week today.

Read more »

a man wearing old fashioned aviator cap and goggles emerges from the top of a cannon pointed towards the sky. He is holding a phone and taking a selfie.
Broker Notes

7 ASX All Ords shares elevated to 'strong buy' status in October

The brokers turned bullish on these ASX companies last month.

Read more »

A businessman compares the growth trajectory of property versus shares.
Share Market News

How ASX shares vs. property performed in October

The national home value rose for the 21st consecutive month while the ASX 200 dipped.

Read more »

Person with thumbs down and a red sad face poster covering the face.
Share Fallers

The worst 3 ASX 200 stocks to buy and hold in October unmasked

You would have done well to avoid these three ASX 200 stocks in October.

Read more »

A female Woolworths customer leans on her shopping trolley as she rests her chin in her hand thinking about what to buy for dinner while also wondering why the Woolworths share price isn't doing as well as Coles recently
52-Week Lows

Why is the Woolworths share price at its lowest point since 2020?

We haven't seen Woolies shares this low since COVID.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why AFT, Amcor, Corporate Travel, and Macquarie shares are falling today

These shares are ending the week in the red. But why?

Read more »