The surge in the housing market has started to ease after almost two years of growth.
The May RP Data-Rismark home value index shows a 1.9% fall in capital city dwelling values in May.
RP Data research director Tim Lawless says this can be attributed to both seasonality and more moderate housing market conditions.
Values were also down across most of the capital cities with Melbourne leading with -3.6%.
Looking at three months, capital city values are up 0.7%, the lowest rolling quarterly rate of dwelling appreciation since the three months ending June 2013.
Over the growth cycle to date, which commenced in June 2012, capital city dwelling values are up 13.9%.
The surge has largely been driven by strong market conditions in Sydney (+21.1%).
“The month-on-month fall in capital city dwelling values is likely due in part to seasonal phenomenon, but may also be indicative of a broader trend towards cooler housing market conditions,” Lawless says.
“Historically, housing market conditions have softened in April and May as the market re-balances from what is typically a seasonally strong first quarter and also as a results of cooler climatic conditions during the autumn and winter months.
“Outside of the seasonality, we have been seeing signs that the housing market is at or approaching the peak of the growth cycle.”
The rolling quarterly rate of growth peaked in August last year and auction clearance rates have been weaker since late February when the capital city clearance rate hit 76%.
Australia’s housing market has shown that a growth phase usually lasts around two years.
Mr Lawless says a recent deterioration in consumer confidence reported in the Westpac/Melbourne Institute Consumer Sentiment Index shows that this factor may also be playing a role in the winding down of the housing market.
City by city results:
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