Mapping the market: What does the downturn actually look like?

According to Eliza Owen from Domain

 

Talking about property price growth across a whole metropolitan market can be confusing.

 

The December house price report showed Sydney and Melbourne are leading a housing market downturn. The stratified median measure demonstrated a decline of 9.9 per cent across Sydney houses, and 8.4 per cent in Melbourne houses.

 

But within these cities, some areas did not reflect those changes at all. In Sydney, Blakehurst house prices rose 11.8 per cent, while Penshurst houses fell as far as 19.7 per cent.

 

 

Meanwhile in Melbourne, Kurunjang house prices increased 17.4 per cent in the same period that St Kilda East saw the steepest decline of 18 per cent.

 

So is there any pattern to suburb performance?

By mapping annual price changes in individual suburbs, a pattern does emerge.

 

Rather than focus on the city-wide median price, which is a rigorous measure of central tendency, mapping individual suburb performance reflects the price changes in suburbs and sub-markets. It also shows how these markets relate to each other.

 

How we mapped it

The following maps reflect the yearly change in the median house sale prices across Sydney and Melbourne suburbs.

 

The median price is based on 12 months of transactions, where the suburb had at least 30 transactions over the year.

 

At each time period, the colour of the suburb on the map represents where it landed on the growth scale – whether suburb prices were down20 per cent or more (dark red), up 20 per cent or more (dark blue), or somewhere in between.

 

The same map was captured at each quarter from the peak of each city housing market. So looking at these maps one after the other allows you to see how the downturn plays out across cities.

Because only house data was analysed, some inner-city suburbs (which are dominated by units) are not featured in these maps.

 

December 2017: The peak

At the peak of the Melbourne market, the stratified median showed Melbourne houses were up 12 per cent year-on-year, to $909,500.

Across Melbourne, 98 per cent of suburbs experienced growth in the median house price, and well over half the suburbs mapped experienced double-digit growth rates.

Only a few, very expensive suburbs in the inner south-east or inner-east saw weak growth or price falls (such as St Kilda East, Windsor and Armadale).

 

March 2018: Signs of weakness in the east

By March 2018, inner-east suburbs of Melbourne saw prices slipping, while peak growth rates had been pushed out further from the CBD.

As tighter credit conditions limited money in the housing market, price falls started to spill over into expensive southern suburbs like St Kilda and Brighton. By March 2018, house prices in these suburbs declined about 3 per cent over the year.

Annual growth rates fell in the east, namely in Glen Iris and Camberwell. The increase in house prices slowed from double digits to 2-3 per cent.

High annual growth rates extended to outer areas of Melbourne, including Melton, Epping and Healesville, which saw annual  increases of over 20 per cent.

 

June 2018: Eastern suburbs downturn extends upwards and outwards

At June 2018, median transaction price growth was flat around Kew, Camberwell and Glen Iris, while the most expensive areas of the inner east continued to see a decline.

But by this point in the downturn, some inner-west suburbs started to see price falls as well.

As softening conditions rippled out to the outer east, growth was strongest on the western fringe of the metropolitan. Melton house prices sustained annual growth of 20 per cent.

However, quarterly growth rates in Melton houses started to weaken, from a peak of 8 per cent in the March quarter to just 3 per cent in the June quarter.  

 

September 2018: Declines manifest in the west

By September 2018, most of the inner-southeast and inner-east suburbs were experiencing some level of decline. Toorak houses led the way, with prices down more than 20 per cent annually and 8 per cent in the quarter.

In the inner west, quarterly price changes had generally been flat or negative since the start of 2018. By September, Port Melbourne, Yarraville and West Footscray displayed annual price falls.

By September 2018, approximately one quarter of Melbourne suburbs saw house price falls.

 

December 2018: Declines accelerate

The acceleration of the downturn can be seen in the rapid spread of annual house price decline between September and December 2018.

The Melbourne region went from approximately 25 per cent of suburbs in decline to more than 50 per cent. Most of the suburbs were located in the outer-east region of Melbourne, while the least affected areas were the north and south-east.

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