Australia’s housing downturn is deteriorating with price falls in Melbourne and Sydney leading the way.
CoreLogic’s monthly home price index released yesterday shows capital city prices around the country fell 0.4 per cent during August.
Prices are down 1.2 per cent over the past three months and nearly 3 per cent over the past year.
The weakest housing market conditions are concentrated in Sydney and Melbourne where dwelling values were previously rising the fastest.
Prices in Sydney and Melbourne have now fallen 3.5 per cent and 3.3 per cent respectively over the first eight months of the year.
Because Sydney and Melbourne comprise approximately 60 per cent of Australia’s housing market by value, and 40 per cent by number, the weaker performance in these cities would drag down the combined capitals and national reading of the market.
Melbourne is now Australia’s weakest capital city housing market. Dwelling values there have fallen 2 per cent over the three months ending August.
“Weaker housing market conditions can be tied back to a variety of factors, foremost of which is the tighter credit environment which has slowed market activity, especially amongst investors,” CoreLogic head of research Tim Lawless said
“Fewer active buyers has led to higher inventory levels and reduced competition in the market. Collectively, these factors have been compounded by affordability challenges, reduced foreign investment and a rise in housing supply.”
The situation is not expected to improve with Westpac being the first of the big banks to lift interest rates out-of-cycle for owner-occupiers.