Home prices in Australia's two largest housing markets of Sydney and Melbourne are falling, and and more falls are expected later in the year.
So far this year, home values in Sydney are down 1.9 per cent, and down 0.5 per cent in Melbourne, the latest data from property analytics group CoreLogic shows.
Over the same period, prices fell one per cent across the five largest capital cities.
AMP Capital’s chief economist Shane Oliver said the two largest cities have been a drag on the national housing market this year, weighed down by tightening of lending standards and more realistic price expectations by home buyers.
He predicts that Sydney and Melbourne property prices will fall another five per cent or so this year with further falls likely next year.
“By contrast home prices in Perth and Darwin are either at or close to the bottom, price growth is likely to be moderate in Adelaide and Canberra, but it may pick up a bit in Brisbane thanks to stronger population growth and the boom in Hobart has a way to go yet,” Dr Oliver said
“Consistent with the fall in Sydney and Melbourne property prices, auction clearance rates and home sales have also fallen.”
Sydney’s auction clearance rate was 67.1 per cent with 775 homes going under the hammer during the week to April 8, CoreLogic says.
This is markedly lower than the same period a year ago where 1,436 homes were up for auction and 77.7 per cent sold.
As for Melbourne, 69.6 per cent of the 720 homes auctioned last week were sold compared with 79.3 per cent of 1,488 auctions in the same period a year ago.
Dr Oliver said the surge in the number of apartments, notably in Sydney, is largely behind the fall in home values and are raising concerns about an oversupply.
He said this has also spurred calls and stories of a pending housing market crash, which in technical terms means a 20 per cent fall in the national average home value.
“But a crash remains unlikely,” Dr Oliver predicts.
He said supply has not kept up with population growth and housing demand over the last decade and it was dangerous to generalise, because while Sydney and Melbourne property prices have surged in recent years, they have fallen in Perth and Darwin and have been steady in other capital cities.
Sydney: Down 1.9pct in past four months, down 2.6 pct in past 12 months
Melbourne: Down 0.5pct in past four months, up 4.9pct in past 12 months
Brisbane: Down 0.1pct in past four months, up 1.1pct in past 12 months
Adelaide: Down 0.4pct in past four months, up 1.7pct in past 12 months
Perth: Down 0.1 per cent in past four months, down 2.3 per cent in past 12 months.
Combined five capitals average: Down 1pct in past four months, up 0.4pct in past 12 months.
Data by global property analytics group CoreLogic.