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Falls in expensive home values bad news for entire market

Property price softening has largely bypassed cheap and middle-tier homes while denting the top end of the market, presaging a wider market downturn, new numbers suggest.

According to CoreLogic’s latest research, the most expensive end of the market saw values fall by 1.1 per cent in the March quarter and this could portent a wider downturn.

“Particularly within the housing markets which have recorded the strongest value growth over recent years (Sydney and Melbourne) that growth across the premium housing sector is slowing more rapidly than the other sectors,” research analyst at CoreLogic Cameron Kusher said.

“This mirrors the experience in other recent housing market slowdowns/downturns whereby it is the most expensive suburbs which slow first and have experienced the larger downturns.”

The cheapest 25 per cent of houses saw values increase by 0.7 per cent in the March quarter, in line with the annual 0.7 per cent growth.

At the same time, the middle 50 per cent of the market saw property values grow by 0.3 per cent, well below the 2.7 per cent average growth over the last year.

The top quarter of properties saw an annual value increase of 0.1 per cent, compared with the quarterly fall of 1.1 per cent.

“With value growth slowing, the trends of the past are being repeated with the most expensive properties experiencing the most rapid slowdown in value growth,” Mr Kusher said.

“During the growth phase, it was these same properties that were also recording the highest rate of capital gain.”

Sydney’s most expensive properties saw the largest value fall (-5.7 per cent) followed by a middle market softening of -0.9 per cent. Following the national trend, the cheapest properties saw moderate 0.6 per cent in the March quarter.

Regional NSW, on the other hand, saw growth among all three tiers, with the largest increase (5.6 per cent) experienced in the middle market.

The same trend occurred in regional Victoria.

However, Mr Kusher noted, “Hobart and regional Tasmania are seeing values grow at a rapid pace and it is interesting to note that the growth in the market is being led by more affordable properties with the relatively expensive housing lagging in terms of growth.

“In Perth and Darwin where the housing markets have been in a downturn for many years different trends are emerging.

“Perth is showing more signs of a recovery than Darwin and it appears the improvement in Perth is being driven by premium housing.”

In comparison, Darwin is exhibiting few signs of an improvement, Mr Kusher said, observing the 9 per cent fall in value among the most expensive properties, followed by an 8.2 per cent value fall in the middle tier and a 6.8 per cent drop in the cheapest property values.

Falls in expensive home values bad news for entire market
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