Growth in Australia's home prices has stalled

Mark Metcalfe/ Getty

The pace of home price growth stalled in May with values down 0.9%, according to the CoreLogic RP Data Hedonic Home Value Index.

After an increase of 3.8% over the first four months of the year, the May index dropped 0.9% for the month across the combined capitals index.

This is the first monthly fall since November last year.

Tim Lawless, CoreLogic RP Data head of research, says the negative growth figure comes at a time when values have been trending higher, driven by strong conditions in Sydney and, to a lesser extent, in Melbourne.

In the three months to May, the best performing capital city was Sydney, up 3.3%, and the weakest Hobart, down 0.9%.

Here’s the national breakdown:

And the May negative result isn’t expected to continue in June.

“The weaker reading across the May results is likely to be short-lived, with the Index expected to show value better growth next month,” Lawless says.

“Other market indicators are also pointing to stronger conditions for the Sydney and Melbourne housing markets with auction clearance rates remaining at or close-to record highs throughout May along with low advertised stock levels across the largest cities, particularly for Sydney.

“The negative May result is likely due to a natural correction from the previously strong month-on-month results.”

The May result marks the three year anniversary for the current growth cycle. Since that time, capital city values have increased by 24.2% with Sydney values rising 39.3% since values bottomed out in 2012.

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.