According to the latest CoreLogic RP Data Hedonic Australian Home Value index, the combined house prices fell by 0.3% in November as the rate of growth continues to slow across the board.
Values rose slightly in Sydney (+1.0%), Perth (+0.9%), Brisbane (+0.4%), and Hobart (+0.2%).
However, values fell in Melbourne (-2.6%), followed by Darwin (-0.8%), Canberra (-0.5%), and Adelaide (-0.3%).
RP Data research analyst Cameron Kusher said the slowdown in capital growth was highlighted when annual growth rates were taken into account.
“Although combined capital city home values increased by 8.5% over the year to November 2014, the annual growth rate is now at its lowest level in the year.”
Apart from Hobart, the annual rate of capital growth in each capital city is now lower than its recent peak – which suggests most cities have moved past their cyclical peak.
Kusher said that, importantly, this was apparent in Sydney and Melbourne, which have been the main drivers of value growth over the past year.
In Sydney annual value growth peaked at 16.7% in April 2014, while in Melbourne it peaked at 11.9% in January 2014.
However, this easing of house prices indicates the market is correcting itself.
CommSec chief economist Craig James said there was more supply coming on to the market and softer demand for homes in response to the higher prices.
“There is no bubble – demand ran ahead of supply in some capital cities, like Sydney, but markets are balancing.”
This situation means there is no need for the Reserve Bank to go ahead with macro prudential controls on property investors, James added.
Combined with negligible inflationary pressures and a lift in manufacturing conditions, it should also ensure that interest rates remain stable until well into 2015.
