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Lonsec   ⟩   News & Insights   ⟩   News   ⟩   Australia’s property market falls at fastest rate in decades
Lukasz de Pourbaix

AuthorLukasz de Pourbaix

TitleChief Investment Officer, Lonsec Investment Solutions

DateJanuary 8, 2019

CategoryNews

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The housing market continues to dominate the headlines in Australia. Housing prices fell 4.8% in 2018 according to CoreLogic, driven by sharp falls in the Sydney (-8.9%) and Melbourne (-7.0%) markets. Price falls are now also evident in the middle and lower segments of the market, while auction clearance rates and volumes are trending lower. Lending to investors and ‘upgraders’ has slumped as banks tighten lending criteria. Suggestions that a potential credit crunch will lead to further significant declines in house prices has some commentators projecting that Australia’s record 27-year run without a recession is coming to an end.

Monthly % falls in Sydney and Melbourne house prices

Source: CoreLogic

The RBA sees the correction in house prices and the tightening of lending conditions as a healthy development, reducing financial stability risks and potentially prolonging the cycle. Investor loans have decreased, interest only loans have declined, and loan-to-value ratios are lower. The RBA recognises, however, that the high levels of household debt and falling house prices could amplify a downturn in the case of an external shock to growth.

IMPORTANT NOTICE: This document is published by Lonsec Investment Solutions Pty Ltd (Lonsec), ACN 608 837 583, a corporate authorised representative (CAR number 1236821) of Lonsec Research Pty Ltd, ABN 11 151 658 561, AFSL 421 445.

Please read the following before making any investment decision about any financial product mentioned in this document.

Warnings: Lonsec reserves the right to withdraw this document at any time and assumes no obligation to update this document after the date of publication. Past performance is not a reliable indicator of future performance. Any express or implied recommendation, rating, or advice presented in this document is a “class service” (as defined in the Financial Advisers Act 2008 (NZ)) or limited to “general advice” (as defined in the Corporations Act (C’th)) and based solely on consideration of data or the investment merits of the financial product(s) alone, without taking into account the investment objectives, financial situation and particular needs (“financial circumstances”) of any particular person.

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Copyright © 2018 Lonsec Investment Solutions Pty Ltd, ACN 608 837 583, a corporate authorised representative (CAR number 1236821) of Lonsec Research Pty Ltd, ABN 11 151 658 561, AFSL 421 445. All rights reserved.

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