CoreLogic has released new data showing that despite heavy price falls across both Sydney and Melbourne, there was still very few sales priced below $400,000:
Throughout the 2018-19 financial year, 26.0% of all houses sold nationally were under $400,000 and 32.5% of all unit sales were under $400,000. Despite the weakening housing market the share of house sales under $400,000 was virtually unchanged from a year ago, down from 26.3% the previous year while the share of unit sales under $400,000 increased from 31.0% over the 2017-18 financial year.
Across the combined capital cities, 13.9% of house sales over the 2018-19 financial year were under $400,000 and 24.6% of unit sales were under this price point. The share of house sales under $400,000 was virtually unchanged from the previous year, recorded at 13.8% while the share of unit sales was noticeably lower at 22.3%. Despite house and unit values falling -8.7% and -5.9% respectively over the year, it is interesting to note that the share of unit sales under $400,000 has increased much more for units than houses…
Over the 2018-19 financial year, 2.3% of all house sales in Sydney were below $400,000 compared to 2.0% over the previous financial year indicating a slight increase. It was a similar story for units with 5.7% of all sales below $400,000 over the past year compared to 4.4% a year earlier. Despite the recent declines in dwelling values in Sydney, there has not been any substantial increase in the share of sales below $400,000…
Although Melbourne dwelling value shave fallen throughout the 2018-19 financial year there has been a further decline in the share of houses and units selling below $400,000. The share of houses selling for less than $400,000 fell from 3.6% over the 2017-18 financial year to 2.9% over the 2018-19 financial year. It’s a similar story for units that recorded a fall in the share of sales under $400,000 from 21.9% to 21.2% over the past two financial years…
Although Brisbane dwelling values have recorded a moderate fall over the past year, the share of house sales under $400,000 has reduced while the share of units selling under that price point has increased. Over the most recent financial year, 23.2% of houses and 53.5% of units sold for less than $400,000. By comparison, over the 2017-18 financial year 25.0% of houses and 51.5% of units sold for less than
$400,000. The share of units selling under $400,000 was last as high as it is currently in 2012-13 financial year…With ongoing value declines over recent years across Perth, the share of sales under $400,000 for houses and units has increased over the most recent financial year, rising to 31.2% of houses sold from 28.7% the previous year while for units the share has risen to 55.0% from 50.2%…
Over the 2018-19, financial year houses and units in Adelaide have recorded a reduced share of sales occurring under $400,000. For houses, the share of sales under $400,000 fell to 35.8% from 39.6% the previous financial year while for units the share fell from 67.9% to 66.1%. Although overall values have drifted slightly lower over the year, it hasn’t led to an increased share in sales under $400,000…
The next financial year could look very different to what we have seen over the 2018-19 financial year. We’re only in mid-August and we’ve already seen interest rates reduced twice, serviceability floors on mortgages reduced and some recent rises in dwelling values in the largest capital cities. While a significant rise in dwelling values isn’t expected, there is an expectation of a moderate increase in dwelling values, as a result the 2019-20 financial year is expected to see fewer sales under $400,000 than those recorded in 2018-19.
Interestingly, separate data from SQM Research shows that despite the heavy price falls, gross rental yields across both Sydney and Melbourne remain at ridiculously low levels:
This suggests that Sydney and Melbourne housing remains way overvalued and further heavy price falls are necessary to restore valuations back to sensible levels.