House prices nationally recorded their first decline since September 2020 in May, led by monthly losses in Sydney and Melbourne, the country’s two largest real estate markets. The CoreLogic home value index declined 0.1% in May, with Sydney dropping 1.0% and Melbourne off 0.7% .
Canberra, Australia’s second-most expensive property market behind Sydney, also eased 0.1%, its first monthly decline since July 2019. CoreLogic research director Tim Lawless said there had been significant speculation around the impact of rising interest rates on the property market.
But he said last month’s increase to the cash rate by the Reserve Bank of Australia was only one factor causing growth in housing prices to slow. “It is important to remember housing market conditions have been weakening over the past year,” he said.
He said since a peak in May 2021, consumer sentiment had soured and fixed mortgage rates had trended higher. “Housing has been getting more unaffordable, households have become increasingly sensitive to higher interest rates as debt levels increased, savings have reduced and lending conditions have tightened. Now we are also seeing high inflation and a higher cost of debt flowing through to less housing demand,” he said
