Australian home prices shrank nearly 5 percent in 2018, marking their worst year since 2008, and the weakness is expected to persist this year, Reuters reports.
Tighter credit conditions and waning investor interest are believed to have led to the slide in prices.
Property values across Australia fell for the 15th consecutive month in December, with the rate of decline in Sydney and Melbourne – the two largest markets – worsening over the year, the report said, citing property consultant CoreLogic.
CoreLogic’s index of home prices nationally dropped 1.8 percent in December from November, and tumbled 2.3 percent for the quarter – the worst quarterly decline in eight years.
Values in the combined capital cities fell 1.3 percent in the month and 6.1 percent for the year. Sydney was the worst performing capital city with prices down 1.8 percent in December.
Regional centers fared better with prices outside the cities staying almost flat.
“Access to credit has been the most significant factor weighing down housing market conditions over the year,” Reuters quoted Tim Lawless, head of research at CoreLogic, as saying.
Since 2015, regulators have clamped down on risky lending by banks, particularly for interest-only loans, while a raft of scandals amid a high-level government-mandated inquiry has added to an air of caution.
Though some lending restrictions were eased last year, Lawless said access to finance is likely to remain “the most significant barrier” to an improvement in housing market conditions in 2019.
Sydney and Melbourne comprise about 60 percent of Australia’s housing market by value and 40 percent by number.
Rental market conditions were also generally subdued, with weekly rents unchanged over the year across combined capital cities.
Falling house prices, however, have boosted rental yields, particularly in Sydney, Melbourne and Perth, according to the report.
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