SYDNEY: Australian house prices snapped a 20-month winning streak in May as falls accelerated in Sydney and Melbourne amid rising interest rates and a slump in the cost of living.
Figures from property consultancy CoreLogic released on Wednesday showed prices nationwide fell 0.1% in May, led by a 0.3% fall in major capitals. Although annual growth slowed, it remained solid at 14.1%, reflecting the huge gains made in 2021.
Values in Sydney fell 1.0% in May, while Melbourne fell 0.7%. Prices in Sydney are down 1.5% from their January peak, but still up 23% from pre-pandemic levels.
Most other cities fared better, with Brisbane up 0.8% in May, Adelaide 1.8% and Perth 0.6%.
Regions continued to benefit from a shift to country living and increased space, and prices rose 0.5% in May, 22.1% more than a year ago. a year.
Weakness in the highly prized Sydney and Melbourne markets partly reflects the Reserve Bank of Australia’s (RBA) decision to raise interest rates in early May, the first hike in 11 years.
“Housing has become increasingly unaffordable, households have become increasingly sensitive to higher interest rates as debt levels have risen, savings have fallen and lending conditions have declined. have tightened,” said CoreLogic research director Tim Lawless.
“Now we are also seeing high inflation and a higher cost of debt which is impacting declining housing demand.”
Supply was turning the tide of buyers with listings hitting above-average levels in Sydney and Melbourne, while auction clearance rates steadily declined.
Demand had also ceased to boil, with house sales in Sydney falling 33% in the three months to May compared to the same period a year earlier, while Melbourne was down 21%.
A sustained drop in prices would be a drag on consumer wealth given that the theoretical value of Australia’s 10.8 million homes is estimated at 9.9 trillion Australian dollars ($7.11 trillion).
($1 = 1.3924 Australian dollars)