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Australia home prices fall at slower pace, auctions revive
[SYDNEY] Australian home prices fell again in May though the pace of decline slowed as auction clearance rates picked up and sentiment was likely to improve further with regulators easing lending rules and on hopes of interest rate cuts.
Monday's report from property consultant CoreLogic showed home prices nationally fell 0.4 per cent in May from April, when they dropped 0.5 per cent. The pace of decline has been gradually slowing since December when prices slid 1.1 per cent.
"This improvement is primarily being driven by a slower rate of decline in Sydney and Melbourne where housing values were previously falling at the fastest rate of any capital city," said CoreLogic's head of research, Tim Lawless.
The Australian housing market remains in a broad-based downturn though, he added.
Over the past 12 months, prices have slid 7.3 per cent nationally. In the major capital cities, values fell 0.4per cent on the month and 8.4 per cent for the year.
Home prices in Australia have been in a free fall since late-2017, eroding household wealth and weighing on consumer spending. That is a major reason the Reserve Bank of Australia (RBA) is considered all but certain to cut rates to an all-time low 1.25 per cent at its monthly policy meeting on Tuesday.
Economists, including those at AMP and Citibank, now forecast home prices to stabilise, citing the unexpected re-election of the country's pro-business coalition government in May together with predictions of an RBA rate cut.
In addition, the Australian Prudential Regulation Authority's (APRA) proposal to ease mortgage stress test rules will help "improve access to credit and enable some borrowers to obtain a larger loan," Lawless said.
Already, there are signs of improving sentiment.
The last week of May saw Sydney clearance rates break above 60per cent for the first time in a year.
"Although clearance rates remain low relative to several years ago when housing market conditions were much stronger, the improved performance at auction aligns with the easing rate of decline," Lawless noted.
In Sydney, prices are down almost 11per cent year-on-year having fallen 0.5 per cent in May. Values in Melbourne are off nearly 10 per cent after easing a smaller 0.3 per cent.
The fall over the past two years has been a drag on household wealth given the housing stock is valued at A$6.8 trillion (S$6.63 trillion), or almost four times the country's annual gross domestic product.