by Wayne Cole
SYDNEY (Reuters) – Australian home prices fell for a third month in July and picked up pace as Sydney suffered its worst fall in nearly 40 years amid rising borrowing costs and a living-off crisis.
Monday’s data from property advisor CoreLogic showed prices nationally fell 1.3% in June to July, when they fell 0.6%. Prices were still higher by 8.0% for the year, reflecting the huge gains made in 2021 and early 2022.
Weakness was concentrated in capital cities where prices fell 1.4 per cent in July, while annual growth slowed to 5.4%, up from 20% earlier this year.
The pullback in Sydney picked up momentum as values declined 2.2% in the month, while Melbourne lost 1.5%. The annual increase in Sydney reached just 1.6%, a long way from the prime days of 2021 when prices rose by a quarter.
“Although the housing market is only three months into decline, the National Home Price Index shows that the rate of decline is comparable with the onset of the global financial crisis in 2008 and the sharp decline in the early 1980s,” said CoreLogic’s research. Said director, Tim Lawless.
“In Sydney, where the recession has been particularly sharp, we are seeing the sharpest price drop in nearly 40 years.”
Other cities also saw a drop of 0.8% in Brisbane, 1.1% in Canberra and 1.5% in Hobart.
The regions also began to cool off as prices fell by 0.8%, ending a long bull run as people moved to the country and move to more locations.
The retreat partly reflects higher borrowing costs as the Reserve Bank of Australia (RBA) raised rates for three consecutive months and is considered certain to hike again this week in an effort to contain rising inflation. [AU/INT]
Markets are betting the current 1.35% cash rate could reach 3.40% by the middle of next year. Major banks have also sharply increased the cost of borrowing on new fixed-rate mortgages and tightened lending standards.
The continued fall in prices will be a drag on consumer wealth, as the estimated value of Australia’s 10.8 million homes rose by $210 billion ($146.52 billion) to $10.2 trillion in the first quarter alone.
($1 = 1.4333 Australian Dollar)
(Reporting by Wayne Cole; Editing by Sandra Maler)