Home price falls are continuing to slow in Australia’s two biggest cities, as an increase in auction clearance rates prompts some analysts to predict that the property market will bottom this year.
CoreLogic’s latest monthly home value index shows prices fell an average of 0.4 per cent in May, with regional areas declining a smaller 0.2 per cent.
Darwin and Perth led the declines, with prices off 1.6 per cent and 1 per cent respectively last month.
Sydney and Melbourne have bigger declines over the past year, but both cities had smaller declines in May of 0.5 and 0.3 per cent respectively.
That fits with recent improvements in auction clearance rates in the two cities, where well over 60 per cent of properties that went under the hammer last weekend sold.
These preliminary figures are likely to drop to clearance rates in the low-60s to high-50s when the final figures come in later this week, but this is around the highest levels in more than a year.
CoreLogic’s Cameron Kusher said the price falls in Sydney and Melbourne over May matched the improvement in auction clearance rates.
“We have been seeing the rate of decline on a monthly basis slow,” he told ABC News.
“That [0.5 per cent fall in Sydney] was actually the slowest monthly rate of decline since March of last year and, similarly, in Melbourne we saw a 0.3 fall over the month, which was the slowest rate of monthly decline since April last year.”
However, while the falls in the big cities are moderating, they are continuing to spread beyond the south-east, with Adelaide the only capital city to record any price growth last month.
Nationally, Cameron Kusher is expecting the housing market to reach its nadir later this year.
“We expect that there’s going to continue being some monthly declines over the coming months and then the market will probably bottom late this year,” he predicted.
However, he is not expecting a rapid bounce in prices because homes are still expensive, particularly in Sydney and Melbourne, and tighter lending criteria will remain in force.
“We still think it’s going to be a very slow recovery and the main reason for that is we have seen the prospect of changes to negative gearing and the capital gains tax now gone, we see that APRA is now talking about changing some of the serviceability limits, and that’s positive for the market, and then we also potentially get an interest rate cut tomorrow or in the coming months, and those three factors are positive for the market.
“But it’s still going to be a lot more difficult to get a mortgage than it was before 2014.”