Home values continue to slide in many of the capital cities this month, with Sydney and Melbourne dropping 1.2% and 1.9%, respectively, according to CoreLogic’s Property Market Indicator Summary, ending on May 21.
Adelaide and Perth are also seeing house price drops, sinking 0.6% and 0.7% respectively, in the past month. Brisbane is the only capital city to post positive results, with house prices rising 0.6% in the past month.
Price drops were evident despite a slight resurgence in auction clearance rates over the weekend. Preliminary figures show that 77.2% of auctions were successful across the combined capital cities, while auction activity rose week-on-week.
“Auction activity across the combined capital cities increased [in the week ending on May 21], up from 2,409 auctions last week, to 2,794 this week, making it the sixth busiest week this year. This week’s weighted average clearance rate across the combined capitals was 77.2 per cent, increasing from a final clearance rate of 72.8 per cent over the previous week,” the CoreLogic report said.
Sydney’s clearance rate was 80.7% and Melbourne’s clearance rate was 79.2%. Adelaide, Perth, Canberra, and Tasmania all saw rising clearance rates in the week ending on May 21.
Richard Wakelin of Melbourne-based Wakelin Property Advisory told Fairfax Media that the market was beginning to level off after five years of growth. Wakelin is anticipating prices to fall of between 5% and 8% over the next 12 months, with the multi-unit high-rise market likely to be heavily impacted.
The Big Four have been tightening restrictions on lending, particularly to investors seeking interest-only loans. The restrictions, which were imposed by the Australian Prudential Regulation Authority (APRA), may be starting to have an impact.
The federal government’s new $6.2bn bank levy could also force the banks to raise interest rates on mortgages again, regardless of whether the Reserve Bank raises the official cash rate or not.
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