- Australian home prices are now lower than a year ago, in average weighted terms.
- The annual price drop largely reflects recent price declines in Sydney and Melbourne, Australia’s largest housing markets.
- It looks like the pace of price declines in slowing, especially in Sydney.
Australian home prices are now lower than they were a year ago.
According to CoreLogic, prices across Australia’s five mainland state capitals fell by 0.1% over the past year in average weighted terms, a result largely reflecting outright declines in Sydney and a sharp slowdown in Melbourne.
In Sydney, the median dwelling price slid 3% over the year. Along with a 2.5% decline in Perth over the same period, that managed to offset modest price gains in each of the other mainland state capitals.
Prices in Melbourne increased by 4.3%, well below the double-digit annual percentage growth rates seen just a year ago.
As seen in the table below, prices have fallen in four of Australia’s five mainland state capitals this year, led by Sydney and Melbourne with declines of 2% and 0.7% respectively.
As Australia’s largest housing markets, that largely explains why annual growth across the combined capitals has now fallen into negative territory.
However, it looks like the pace of price declines in Sydney and Melbourne are starting to slow.
According to CoreLogic, prices fell 0.2% in these capitals over the past month, significantly slower than the pace of declines seen earlier this year, especially in Sydney.
Combined with flat price outcomes elsewhere, prices across the mainland state capitals fell 0.1% over the past month in average weighted terms.
With the pace of price declines clearly slowing, the question now is whether the recent weakness will begin to reverse in the months ahead?
Forecasters from ANZ and HSBC believe it will, pointing to a number of tailwinds such as still-low mortgage rates and an improvement in household income growth as factors that should help to underpin prices.
While not everyone agrees with this view, there’s now little doubt that price declines, particularly in Sydney, have moderated in recent weeks.
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