Australia home prices continue to decline in March, but deflation slows

Australian home prices fell again in March as credit conditions remained tight and investors stayed away, though the pace of decline slowed as more auctions found buyers.

Monday’s report from property consultant CoreLogic showed home prices nationally fell 0.6 per cent in March, from February when they dropped 0.7 per cent. That was the smallest monthly fall since October. Values were down 6.9 per cent on a year earlier.

The index has fallen in 15 of the past 17 months, wiping out more than two years of gains. Values in the combined capital cities fell 0.7 per cent in March, after a 0.9 per cent drop the previous month.

The slower pace of decline came as auction clearance rates have picked up over the last month or so, particularly in the hardest-hit markets of Sydney and Melbourne.

Prices fell 0.9 per cent in Sydney in March, and 0.8 per cent in Melbourne.

Values nationally have fallen 7.4 per cent from their peak in October 2017, though they are still almost 16 per cent higher than five years ago.

Any improvement would be welcomed by the central bank, the Reserve Bank of Australia (RBA), which is concerned that a further substantial fall in prices would undermine household wealth and spending.