Australian home prices post first annual fall in six years
Home prices across Australia’s major cities eased for an eighth straight month in May as tighter lending conditions at banks cooled demand in Sydney and Melbourne, although regional markets continued to tick higher.
Property consultant CoreLogic said on Friday its index of home prices for the combined state-capital cities slipped 0.1 per cent in May, after a 0.4 per cent dip in April.
That left nationwide prices down 0.4 per cent for the year, the first annual decline since 2012.
Along with tougher rules from regulators, lenders have also been raising borrowing standards amid revelations of widespread malpractices on loans and financial advice among several major institutions.
The result has been a marked pullback in demand in the once red-hot markets of Sydney and Melbourne, ending a boom in prices that ran for five years.
“The negative headline growth rate is a symptom of weakening housing conditions across the capital cities, led by Melbourne and Sydney, where previously capital gains were nation-leading,” noted CoreLogic head of research Tim Lawless.
Sydney and Melbourne comprise about 60 per cent of Australia’s housing market by value and 40 per cent by number of units.
Prices in Sydney eased 0.2 per cent in May, leaving values down 4.2 per cent on the year. Home prices had been growing by more than 20 per cent a year at the peak of the boom.
Melbourne saw a drop of 0.5 per cent in the month, while annual growth slowed to 2.2 per cent.
Home prices outside the major cities edged up 0.2 per cent in May to stand 2.2 per cent higher on the year. The best performing capital city was Hobart in Tasmania, clocking an annual gain of 12.7 per cent.
The slowdown in the major cities follows a tightening in standards on investment and interest-only loans, leading banks to raise the interest charged on some mortgage products.
The Reserve Bank of Australia, the country’s central bank, has also expressed concern that debt-fuelled speculation in property could ultimately hurt both consumers and banks.