CoreLogic’s dwelling values results for September reported that losses have been driven by the premium end of the market, whereas values across the most affordable 25% segment has held up well:
While this is true when viewed on an annual basis, growth rates are trending down across all price segments:
Moreover, when looking at the latest quarter, values are falling across all segments, with the bottom 25% (“Low Value”) of homes in Sydney actually falling faster than the top 25% (“High Value”):
As we have reported previously, first home buyer (FHB) stamp duty incentives were introduced in both NSW and VIC from 1 July 2017, which has driven a 24% and 14% respective lift in the number of FHB housing finance commitments versus the prior year:
The contagion of the downturn into the affordable end of the market is bad news for the economy as it implies that the negative wealth effect caused by falling dwelling values will spread more widely, dampening consumption and growth.
