https://www.smh.com.au/business/the-economy/house-price-tumble-now-extending-across-the-country-20190319-p515eb.htmlHouse prices across the country are falling even faster than they did during the Global Financial Crisis amid signs the Reserve Bank will consider an interest rate cut if the jobs market starts to deteriorate.
The Australian Bureau of Statistics on Tuesday reported house prices across the nation's capitals fell by 2.4 per cent in the December quarter to be down by 5.1 per cent through 2018.
In dollar terms, almost $270 billion has been wiped from the value of the nation's housing stock since March last year with $179 billion gone from NSW homes. Victorian home values have fallen by $104 billion.
House price falls are growing according to figures from the ABS.Credit:Pat Scala
It eclipses the worst annual falls recorded during the GFC when prices edged down by 4.6 per cent in early 2009.
Sydney prices dropped by 3.7 per cent in the quarter to be down by 7.8 per cent through the year. It's the worst performance in the city since the bureau started collating figures in 2003 and the sixth consecutive quarterly fall.
Melbourne prices fell by 2.4 per cent in the quarter. They declined by 6.4 per cent across 2018 with prices down for four consecutive quarters.
Bureau chief economist Bruce Hockman said the Sydney and Melbourne markets were being hit by a range of factors.
"While property prices are falling in most capital cities, a tightening in credit supply and reduced demand from investors and owner occupiers have had a more pronounced effect on the larger property markets of Sydney and Melbourne," he said.
The decline was not just confined to the nation's two largest cities.
Prices were down by 1.1 per cent in Brisbane, by 1 per cent in Perth, by 0.6 per cent in Darwin and by 0.2 per cent in Canberra.
The last time so many capital cities recorded a fall in prices was in 2011.
Minutes of the Reserve Bank's March meeting, at which official interest rates were held at 1.5 per cent, reveal the RBA board is growing increasingly concerned about both the possible flow-on effects of falling house prices and the way key economic indicators are moving in opposite directions.
Unemployment is at 5 per cent, including a 40-year low rate of 3.9 per cent in NSW, but overall GDP has suffered its worst back-to-back quarterly reads in 13 years.
Some forward indicators suggest the jobs market may be softening. New figures due out on Thursday should give some insight into whether employment growth is continuing with some analysts tipping a drop in the number of working Australians.
The minutes noted for the first time time the RBA's concern about the different messages being sent from the jobs market and the overall economy.
"[The board] assessed that it would be appropriate to hold the cash rate steady while new information became available that could help resolve the current tensions in the domestic economic data," the minutes showed.
They also confirmed that RBA members are aware of other signs that falling house prices were starting to have a wider economic impact, pointing to the sharp drop in car sales in NSW.
Ernst & Young chief economist Jo Masters says falling house prices point to an economic downturn.
Markets have priced in an interest rate cut by July and a second early next year.
Ernst and Young chief economist Jo Master said it appeared house price falls were accelerating, adding to a string of poor data.
"Further declines of this magnitude could undermine consumer confidence and escalate the negative wealth effect," she said.
CommSec senior economist Ryan Felsman said given the headwinds facing the economy, the winner of the May federal election may have to act.
"It appears that whoever wins federal government in May will need to unleash some fiscal initiatives, including a bring-forward of proposed tax cuts, to encourage consumers to spend," he said.
