Although tighter credit conditions combined with higher supply levels, focused in Sydney and Melbourne’s high-rise unit market sectors are still impediments facing the property market.
“These markets are moving through the peak in an unprecedented number of off the plan unit sales, many of which are receiving valuations at the time of settlement that are lower than the contract price,” Lawless said.
‘Tight credit conditions are the new normal’
After recording a steep decline, housing credit growth appears to be stabilising, but Lawless describes tighter credit conditions as “the new normal” set to “continue dampening market activity”.
“Lenders are progressively becoming less reliant on average household expense benchmarks and prospective borrowers should expect some scrutiny of their balance sheets during the loan application process,” he said.
On a quarterly basis, every capital city housing market recorded a drop in value, emphasising the broader geographic scope of the housing market slump.
The largest falls over the past three months were recorded in Darwin (down 3.6 per cent) and Perth (down 2.1 per cent) where the property market downturn has continued since mid-2014.
Adelaide recorded the smallest decline amongst the capitals over the quarter, with values down 0.4 per cent.
While in terms of rental growth, every capital city has recorded a rise in rental yields over the year, with gross rental yields remaining below 4 per cent in Sydney and Melbourne.