House price growth in Australia is finally slowing down, the latest data suggests.
Releasing the October version of its Home Value Index, property research firm CoreLogic says national dwelling prices remained unchanged throughout the month as values contracted by 0.5 percent in Sydney, 1.6 percent in Darwin and 0.1 percent Canberra whilst remaining unchanged in Adelaide and Perth and increasing elsewhere.
Moreover, values over the three months to October have risen by just 0.3 percent, with prices in capital cities up 0.4 percent and regional values down 0.1 percent.
Dwelling prices over the past three months have fallen 0.6 percent in Sydney, 0.7 percent in Perth and 4.4 percent in Darwin.
Across remaining capitals, prices have risen by 1.9 percent in Melbourne, 0.6 percent in Brisbane, 3.3 percent in Hobart, 0.1 percent in Adelaide and 1.1 percent in Canberra.
This is the first month in which prices have not risen since June 2016, whilst the three month decline in Sydney represents the greatest quarterly fall in that market since the March quarter of 2016.
CoreLogic research analyst Cameron Kusher said conditions are softening.
“The clear trend across the market is that the rate of growth in dwelling values is slowing and this is highlighted when analysing the change in values over the tree months to October,” Kusher said.
The results follow a surge in prices over recent years.
Over the past twelve months, capital city house prices have increased by 7.0 percent as prices rose by 12.7 percent in Hobart, 11.0 percent in Melbourne and 7.7 percent in Sydney.
Kusher said the slowdown in Sydney was being driven by several factors including the number of homes being offered for sale.
Compared with a year ago, he says the number of properties offered for sale in Sydney is up by almost twenty percent.
He said Melbourne has not experienced the same level of weakening.
“Sydney’s housing market is slowing on the back of heightened stock available for sale, stretched affordability, increasing number of residents moving interstate and a pull-back in investor housing demand (investors have been the greatest source of housing demand in Sydney over recent years),” Kusher said.
“Value growth in Melbourne has also slowed however, the slowdown has been much more moderate than in Sydney.”
“This is likely due to a number of factors including the cost of housing still being much lower than in Sydney, interstate migration to Vic is the strongest in the nation, investor demand has been strong over recent years but nowhere near as strong as in Sydney and Melbourne hasn’t recorded a spike in the volume of stock for sale like Sydney has.”
Whilst Kusher acknowledged that the slowdown will help ease affordability pressures, he cautioned that policy makers would monitor conditions to ensure any softening was controlled and did not disrupt the broader economy.