Home prices take big dip
Declines sharpest in expensive market sector
AUSTRALIAN home prices suffered their sharpest monthly fall in July since late 2011 as declines gathered pace in Sydney and Melbourne sank into the red, data showed yesterday.
Property consultant CoreLogic said its index of home prices nationally dropped 0.6 per cent in July from June, leading to an annual fall of 1.6 per cent. Values in the combined capital cities fell 0.6 per cent in the month and 2.4 per cent for the year.
The slowdown has been greatest in Sydney, where prices were down 5.4 per cent in the year to July, while Melbourne eased 0.5 per cent. Declines were sharpest in the most expensive segments of the housing market, while the more affordable sectors suffered much less.
Sydney and Melbourne comprise about 60 per cent of Australia’s housing market by value and 40 per cent by number. Demand has been sapped by tougher regulations on bank lending and by a general rise in borrowing standards amid revelations of widespread malpractice in the financial sector.
Many small to medium sized banks have also recently raised rates on some mortgage products, blaming higher wholesale funding costs, although the major banks have yet to move.
The pullback in prices comes after years of stellar growth.
“Since peaking in September last year, the Australian housing market has recorded a cumulative 1.9 per cent fall in value; a relatively mild downturn to date considering values remain 31 per cent higher than they were five years ago,” said CoreLogic Head of Research Tim Lawless (pictured).
Mr Lawless said the availability of housing credit had been “a significant factor” in the slowdown.
CoreLogic identified Hobart as the nation’s strongest property market, with values up 1.1 per cent quarterly and 11.5 per cent annually to a $435,833 median, with Brisbane and Adelaide the only two other capitals to record gains over the past three months.
Mr Lawless said some parts of Melbourne’s property market were still showing strength – notably the affordable end, where values were up 7.5 per cent annually.
In stark contrast, they’ve dipped 4.1 per cent at the market’s top end.
Mr Lawless expected the nation’s “trajectory of subtle declines” to continue for the remainder of the year.