However, the latest trends show that the growth of house prices are starting to slow down, and this can be clearly seen in Australia.
In May of this year the latest statistics show that house prices in Australia fell by 1.1%. This was largely brought about by declines in the usually buoyant cities of Sydney and Melbourne. Until recently these cities have led the growth, but the last three months saw overall prices fall by 0.4%.
Melbourne Prices
Prices in Melbourne have fallen by 1.7% month on month, although they are up 0.7% quarter on quarter. A year on year outlook shows that prices in the city remain 11.5% higher with a median value of $665,000.
Sydney Slow Down
The outlook in Sydney is much the same with a month on month fall of 1.3%, whilst the quarter on quarter prices remained unchanged. Sydney also saw and increase in year on year prices, this time by 11.1%, which means that median house prices in the city now stand at $872,300.
Other Australian Cities
This pattern seems to be repeated across much of Australia including Hobart, which saw month on month falls of 4.8%, quarter on quarter falls of 1% and the median price in the city now stands at $350,000.
The capital city of Canberra has also been subject to these declines, with a modest month on month fall of 0.15. The quarter on quarter prices fell by 1.5% leaving median prices sitting at $600,000.
Darwin and Perth have also seen month on month falls of 3.5% and 0.4% respectively. Perth saw a 0.4% drop in quarter on quarter prices, whilst in Darwin it was 0.1%. Year on year, Darwin house prices fell by 6.4% to $460,000, and in Perth the figure stood at $481,500 after a drop of 3.8%
Australian Growth Cities
It is not doom and gloom across the whole country, as cities such as Adelaide and Brisbane seem to have bucked the trend. Adelaide saw a month on month rise in prices by 0.8% to a median price of $432,000, whilst Brisbane boasts average house prices of $490,000 after a month on month growth of 0.3%. The longer term statistics show the same picture with Adelaide prices growing by 2% quarter on quarter and 2.9% year on year. Brisbane followed suit with quarter on quarter rises of 1.2% and year on year increases of 2.3%.
When looking at these figures, it is necessary to take seasonality into account, as values have consistently fallen during the month of May over the last few years. The growth in the market has lost its momentum, particularly in the larger cities of Sydney and Melbourne. This is due to affordability constraints and the fact that investors take up a large proportion of the housing demand.
The Australian Prudential Regulation Authority (APRA) recently announced new macro prudential measures designed to reduce the rate of interest-only lending, which means that mortgage rates are trending higher.
Rising stock levels and a reduction in market activity have also acted as indicators of a slowdown in the housing market. Tighter credit policies, rising mortgage rates and affordability constraints may all be contributing factors to this. Whatever the reason, it seems the brakes have firmly been put on the spiralling house prices of Australia.
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