Australia housing boom fades as Melbourne, Sydney pull back

[SYDNEY] Australia's housing boom appears to be over, with growth poised to fall as low as 5 per cent this year after a 22.1 per cent rise in 2021 - the strongest since 1988.

A softening housing market cooled further in December, rising 1 per cent nationally as the boom in high-end properties that has underpinned the record run tapered significantly, according to CoreLogic data released Tuesday (Jan 4).

Melbourne, Australia's second most populous capital city, reported its first price decline since October 2020, slipping 0.1 per cent last month, the data show.

Sydney also posted its slowest month since then, recording an increase of just 0.3 per cent. The upper end of the housing market, which led the boom, is now leading the slowdown, with prices up 2.6 per cent in December, compared with a 3.7 per cent rise in cheaper houses, the data show.

"A surge in freshly advertised listings through December has been a key factor in taking some heat out of the Melbourne and Sydney housing markets, along with some demand headwinds caused by significant affordability constraints and negative interstate migration," according to Tim Lawless, research director at CoreLogic.

Lawless is predicting a "sharp slowdown" in the market this year, with growth at 5 to 7 per cent, as "affordability constraints along with tighter credit conditions drag down demand".

BLOOMBERG