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It looks like Australia's housing market slowdown is getting even slower

Children try to climb a giant neon snail sculpture created by the art collective Cracking Art Group in the central business district of Sydney on September 20, 2013. Photo: Saeed Khan/ AFP/ Getty Images.

Australia’s housing market slowdown looks like it’s getting even slower.

House price growth is stalling, growing by just 0.2% across the nation in the three months to November, and now auction clearance rates have fallen to yet another multi-year low.

The regulator-enforced slowdown is showing few signs of reversing course.

According to CoreLogic, a national clearance rate of 60.2% was achieved across the nation’s capital cities last week, surpassing the previous cyclical low of 61.1% set one week earlier.

It now sits at the lowest level in nearly two years.

Source: CoreLogic

Now, like then, the decline last week was largely due to fewer properties selling in Melbourne, Australia’s busiest auction market.

“Across Melbourne, the city has seen clearance rates continually decline each week over the last 4 weeks, with last week surpassing the previous as the lowest recorded since June 2016,” CoreLogic said.

“There were 1,647 Melbourne auctions held last week, returning a 65.4% clearance rate, down slightly on the week prior when 1,736 auctions were held and 65.5% cleared.”

The recent trends suggest Melbourne is following the lead provided Sydney where clearance rates are now regularly printing in the mid-50% region.

Australia’s largest and most expensive housing market recorded a final clearance rate of 56.2% for the week, down marginally on the 56.8% level reported a week earlier.

CoreLogic said the decline came despite fewer properties being taken to market, falling from 1,215 to 1,143 last week.

Of the remaining capitals, clearance rates improved in Canberra and Tasmania week-on-week but fell in Adelaide, Brisbane and Perth.

Source: CoreLogic

Turning to the week ahead, CoreLogic is currently tracking 3,124 auctions across the country, the fourth consecutive week that more than 3,000 properties have been offered.

In Melbourne, 1,717 properties are set to go under the hammer, making it the busiest individual market for activity. Sydney, in comparison, only has 936 auctions scheduled.

Across the remaining auction markets, Adelaide and Perth are set to host a higher volume of auctions while fewer are scheduled across Brisbane, Canberra and Tasmania.

The weakening in Australia’s national clearance has coincided with a sharp slowdown in property price growth, led unsurprisingly by Sydney and Melbourne.

According to separate data from CoreLogic, prices in Sydney fell by 1.3% in the three months to November, leaving the annual pace of growth at just 5%. Earlier this year, prices in the city had been growing at an annual pace of close to 20%.

While not to the same degree as Sydney, prices in Melbourne grew by 1.9% over the past three months, although that too has seen annual prices near halve from the levels seen in the first half of the year.

Combined, the slowdown in Australia’s largest capitals has seen national price growth in weighted terms fall to an annualised rate of 5.5%.

An increased amount of housing stock on offer, particularly in Sydney, has undoubtedly contributed to the decline in price growth and clearance rates. Tighter macroprudential measures on investor and interest-only lending from Australia’s banking regulator, APRA, has also been factor, seeing investor activity subside from the levels seen in prior years.

Markets will get further information on the impact these tighter regulations have had on investor housing finance with the ABS set to release housing finance data for October later this week.

In September, the value of loans to investors fell 6.2% to $11.837 billion, the smallest monthly total since June 2016. Compared to the same month in 2016, investor housing finance fell by 6%, the largest drop in over a year.

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