Sydney slowdown leads to sluggish house price growth
The housing market has steadied for the month of August.
Results from the CoreLogic Hedonic Home Value Index show a relatively flat month for house prices in August as price growth slows. Capital city house prices grew by only 0.1% for the month, while regional dwelling values fell 0.2%.
CoreLogic head of research, Tim Lawless, said a flat month for Sydney contributed to the sluggish growth.
“We’re seeing capital gains in markets like Sydney, which were previously very strong, now being weighed down by affordability constraints and tighter lending conditions. The knock-on effect is a curb in investment credit growth and higher mortgage rates for investment and interest-only mortgages,” Lawless said.
Sydney saw no price growth for the month, with the quarterly rate of growth slowing to 0.3% from a peak of 6.3% in the October 2016 quarter. Melbourne showed more resilience, growing by 0.5% for the month and 1.9% for the quarter.
Lawless said affordability constraints were largely behind Sydney’s slowdown.
“If the current trends continue, by the end of the year we could see dwelling values across Australia’s two largest housing markets, Sydney and Melbourne, trend lower as they move through their cyclical peaks,” he said.