The CoreLogic home value index results have been released today, did the Royal Commission stop the decline?
The decline of house prices has certainly slowed somewhat, but the declines continued following on from January. There was a 0.7% decline of national dwelling values in Februrary according to CoreLogic, which takes the total decline to 6.7% since the peak in October 2017.
Some market commentators thought that the fairly benign Royal Commission report could cause an increase in house prices again. It might be too early to conclude there won’t be a short term bounce, but apparently auction clearance rates did improve somewhat in February compared to recent prior months.
However, it will take more than just Australia and New Zealand Banking Group (ASX: ANZ), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Commonwealth Bank of Australia (ASX: CBA) lending a little more to boost house prices again.
Sydney House Prices
According to CoreLogic, Sydney house prices fell 1% in February. That means that last quarter has seen a 4.1% decline and the last 12 months show a 10.4% fall.
Melbourne House Prices
Melbourne house prices also declined by 1% over February 2019. Similarly, Melbourne prices are down 4.1% for the quarter. However, the annual decline is only showing a 9.1% drop, although it may soon reach double digits if 1% monthly falls continue.
Brisbane, Adelaide and Perth
It was a mixed bag from Australia’s other major cities. Brisbane prices fell 0.3% in February, which represents most of the 0.5% annual decline. Adelaide house prices didn’t move and show a 1% rise over the past 12 months. Perth property prices fell 1.5% for the month and the last year now shows a 6.9% decline.
Hobart, Darwin and Canberra
It was also a mixed bag for the other capital cities. Hobart house prices went up 0.8% and are up 7.2% over the year. Darwin dwelling prices plunged 1.7% in February and are down 5.3% during the past 12 months. Canberra house prices were down 0.2% in February but up 3.4% in the past year.
CoreLogic Head of Research Tim Lawless said: “The February housing market results marked a subtle improvement in the rate of decline, however the housing market downturn is now more widespread geographically and we aren’t seeing any indicators pointing to the market bottoming out just yet.”
As long as house prices keep falling, I’m not comfortable considering retail, bank or other consumer-facing ASX shares. We are not in recession territory yet, but if the declines keep going it could cause a significant slowdown to the ‘real’ economy, not just the price people will pay for property.