Sydney and Melbourne property prices slow as Coalition considers 'ghost house' tax
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Version 0 of 1. Property prices in Sydney and Melbourne slowed considerably in April, hinting at a possible break in the trend of runaway growth. But it’s too early to call the “peak of the marketplace” because April is exceptionally seasonal with Easter, school holidays and the Anzac Day long weekend affecting property sales, warns Tim Lawless, the head of research from CoreLogic. The new data comes as the Turnbull government reportedly plans to charge foreigners up to $5,000 for leaving their Australian apartments empty, as part of changes to be announced in next week’s budget. The so-called “ghost house” tax will be a new condition of Foreign Investment Review Board approval, according to Sky News. The government is also reportedly planning to ban foreigners from buying more than half of the apartments in new apartment builds, in a bid to help more Australians buy a property. New data from CoreLogic on Monday shows property prices across Australia’s eight major cities increased by just 0.1% last month, pulling the annual growth in prices down from 12.9% in March to 11.2%. The moderation was due largely to house prices in Sydney, the country’s largest housing market, being slightly negative for the month (-0.04%), and Melbourne recording just 0.5% growth. The data shows the split between Australia’s house prices and unit prices continuing from earlier months. CoreLogic’s eight capital city aggregate shows unit prices in April declined by 1.2%, pulling the annual pace of growth from 9.8% in March down to 6.4% in April. House prices grew by 0.4% in April, ensuring the annual pace of growth for house prices has declined slightly from 13.4% in March to 11.9% in April. Economists say recent higher borrowing rates announced by the major banks, and tighter lending conditions, will have had some dampening impact on housing activity, given investors account for about half of all new lending. “The big question is whether it will be enough to cool the market sufficiently to alleviate the Reserve Bank’s heightening concerns about ongoing house price inflation, particularly in Sydney and Melbourne, ever expanding household debt and their potential impact on financial stability,” Commonwealth Bank economist John Peters said on Monday. The treasurer, Scott Morrison, said the CoreLogic data showed the Turnbull government was wise to adopt a careful approach to housing policy. “I note today the CoreLogic data showed that, across all five capital cities, there was a negative outcome in the apartment market,” he said on Monday. “I mentioned that last week. I said the apartment market had already begun to turn. “We also saw in that data what was happening with home prices in Sydney as well. A flattening of what we’d seen with growth. I have been careful to say all along that you have to be so careful in how you engage in housing policy.” Lawless said the April results were the weakest monthly changes in dwelling values across Sydney since December 2015 but they came after dwelling prices have risen 75.1% over the past five years, at an annual rate of growth of 15%. “We need to be cautious in calling a peak in the market after only one month of soft results,” Lawless said. “April, in particular, coincides with seasonal factors including Easter, school holidays and the Anzac Day long weekend. “The softer results should also be viewed against a backdrop of an ever evolving regulatory landscape which is firmly aimed at slowing investment and interest-only mortgage lending. “In a city like Sydney, where more than 50% of new mortgage demand has been from investors, a tighter lending environment for investment purposes has the potential to impact housing demand more than other cities.” |