Economy

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Australia’s major cities home prices fell for the eighth straight month in May, marking the first annual decline in 6 years. Tighter lending conditions at banks following the banking Royal commission and affordability issues say demand in Sydney and Melbourne soften.

 Sydney Harbor HomesSydney Harbor - Homes Coming off the Boil for 8 Months in a row

Property consultant CoreLogic Index  of home prices for the combined state-capital cities fell 0.1 per cent in May, after a 0.4 per cent fall in April. Nationwide prices are now down 0.4 per cent for the year, the first annual decline since 2012.

"Nationally dwelling values continued their downwards trend last month; the seventh consecutive month on month decline since the national index series peaked in September last year. While the national market has slid into reverse, many of the trends we have been following over the past five years have reversed " said CoreLogic head of research Tim Lawless

Tougher rules from regulators has forced lenders to raise borrowing standards as negative revelations of widespread malpractices on loans and financial advice among several major institutions. The result has been a solid pullback in demand in the previously surging markets of Sydney and Melbourne, puuting a halt to the five year boom in prices.

“The negative headline growth rate is a symptom of weakening housing conditions across the capital cities, led by Melbourne and Sydney, where previously capital gains were nation-leading,” added Lawless.

Sydney and Melbourne comprise about 60 per cent of Australia’s housing market by value and 40 per cent by number of units.

Prices in Sydney fell 0.2 per cent in May, leaving values down 4.2 per cent on the year. Home prices had been growing more than 20 per cent a year at the peak of the boom.

Melbourne prices fell 0.5 per cent in may, leaving values down  2.2 per cent annually.

Home prices outside the major cities edged up 0.2 per cent in May to stand 2.2 per cent higher on the year.

The best performing capital city was Hobart in Tasmania, with an annual gain of 12.7 per cent.

The Reserve Bank of Australia has expressed concern that debt-fuelled speculation in property could ultimately hurt both consumers and banks. The RBA left rates unchanged at their policy meeting overnight.

Source: Corelogic

From a Sunburnt Country

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