Australian house prices went backwards last week, driven lower by continued weakness in Sydney, Australia’s most expensive and largest property market.
According to CoreLogic, prices in Sydney fell by 0.2% last week, seeing the decline over the past month accelerate to 0.6%.
Based on the early evidence, it looks like prices in Sydney may fall for a third consecutive month in November, building upon those reported in September and October.
Like Sydney before it, there are also signs that Melbourne’s once red-hot housing market is also starting to cool.
Prices in the city were unchanged last week, leaving price growth over the past month at 0.3%.
The pullback in Sydney, and slowdown in Melbourne, coincides with a raft of other housing market indicators — including auction clearance rates and housing finance data — which point to a noticeable softening in housing market activity from the levels seen earlier this year.
The weakness in Sydney and Melbourne appears to be leading to softer price outcomes in other Australian capital cities.
According to CoreLogic, prices in Brisbane were unchanged last week while those in Adelaide and Perth fell by 0.1% and 0.2% respectively.
As a result of the broad-based weakness, prices across Australia’s five mainland state capitals fell by 0.1% over the week in average-weighted terms.
Like Sydney, prices in Adelaide and Perth have also gone backwards over the past month, falling 0.1% and 0.2% respectively.
With price growth in Melbourne also slowing, prices across Australia’s mainland state capitals have fallen by 0.2% over the past month in weighted terms.
Given the recent weakness, annual price growth is also slowing noticeably, falling to 6.4% from 6.8% a week earlier.
By individual capital, prices in Melbourne grew by 10.5% over the year, well below the high-teen levels seen just a few months ago.
The price deceleration in Sydney has been even more pronounced with prices now up just 6.7% from a year earlier. Given that prices were growing quickly 12 months ago, the annual growth rates will almost certainly slow further should recent trends continue.
Of the other state capitals, prices in Adelaide and Brisbane have risen by 4.1% and 2.6% respectively over the year. Perth, despite improving economic conditions and firmer commodity prices, continues to lag the national average with prices falling 2.8% from 12 months earlier.
Combined, prices nationally rose by 6.4% over the past year in weighted terms.
While tighter restrictions on investor housing finance and affordability constraints have undoubtedly contributed to the slowdown across the broader housing market, higher stock availability is another factor creating headwinds for prices.
According to CoreLogic, there were 115,487 properties listed for sale across the nation’s capitals last week, up 2.3% from the levels seen 12 months earlier.
As seen in the chart below, the total number of listings is now the highest level seen in several years.
Listings in Sydney, where prices are now falling, have surged by 20.1% to 26,886 over that period.
In Melbourne, where price growth continues to outperform, there are currently 32,129 properties listed for sale, up just 1.5% on the levels of a year earlier.
There is also greater stock available for sale in Brisbane, Adelaide and Canberra, something that should be watched closely for clues as to what direction prices may move in those centres in the months ahead.
In Hobart, where prices are currently growing the fastest of any capital city, total listings have fallen by 33.1% over the year.
Listings have also fallen by 13.9% and 3.7% in Perth and Darwin, although, in stark contrast to Hobart, this follows a prolonged period of previous price weakness.
The reduction could be interpreted as a sign that the worst of the price declines in these cities may now be over.