The Motley Fool

It’s official: Australia’s property markets are falling

It’s official. Sydney and Melbourne house prices are falling, losing 1.2% and 1.9% respectively over the past month, according to Core Logic.

Adelaide and Perth are also seeing house prices fall – sinking 0.6% and 0.7% respectively in the past month. Brisbane is the lone capital city posting positive results, with house prices rising 0.6% in the past month.

That was despite a slight resurgence in auction clearance rates over the weekend. With Sydney seeing a 2017 high 81% clearance rate of auctioned properties change hands. Melbourne’s clearance rate was 79.2%, up from the previous week’s 75%, and Adelaide, Perth, Canberra and Tasmania all saw rising clearance rates.

Melbourne buyer’s agent Richard Wakelin has told Fairfax Media that the market was starting to level off after five years of growth. He says he is anticipating modest price falls of between 5 and 8% over the next 12 months, with the multi-unit high rise market to be heavily impacted.

Australia’s big four banks Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) have been tightening restrictions on lending, particularly to investors and those seeking interest-only loans, which may be starting to have an impact.

The new bank levy could also force the banks to raise interest rates on mortgages again, whether the Reserve Bank of Australia (RBA) raises the official cash rate or not. With household debt (mortgages, credit cards & personal loans, etc.) at staggering levels, 89% higher than incomes, and rising by 32% over the past five years according to The Australian.

Even the RBA is concerned about household debt levels, with governor Phillip Lowe recently saying that the surge in debt had made the economy more susceptible to future shocks. Another concern is that consumers appear to be keeping their hands in their pockets and cutting household spending. Either that or they are throwing their excess cash at their debt.

Foolish takeaway

Many property investors may have assumed that interest rates would remain low as they are currently, but they might be in for a shock, as property prices fall, interest rates rise, and banks institute stricter lending measures.

A Big, Fat, Fully Franked Dividend

This company’s dividend is almost the stuff of legends. Since it started paying dividends in 2007, it has increased its payout to shareholders every single year, a run that includes 21 consecutive dividend increases.

Based on the last 12-months of dividends, its shares are currently offering a fully-franked 4.8% yield, which grosses up to almost 7% when those franking credits are included. And in stark contrast to the likes of Commonwealth Bank and Telstra, this company just increased its dividend by over 13%, and guided for 2017 profits to grow by 20%!

Discover the name of this “new breed” of blue chip along with 2 others in our new FREE report "The Motley Fool’s Top 3 Blue Chips Stocks For 2017."

Click here to receive your copy.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of National Australia Bank Limited. Motley Fool contributor Mike King has no position in any stocks mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now