Australia's property downturn marks one-year anniversary

Sydney

AUSTRALIA'S property slump has reached the one-year mark as the nation's two major cities have become the biggest drag.

National dwelling values dropped 0.5 per cent last month, weighed by declines in Sydney and Melbourne, according to CoreLogic data released on Monday.

Prices in the two east coast cities, which make up more than half of the national value of housing, have fallen 6.1 per cent and 3.4 per cent respectively from a year earlier.

"Sydney and Melbourne are now the primary drag on the national housing market performance," taking over from regions that were impacted by the mining downturn, CoreLogic's head of research Tim Lawless said.

Values have fallen greatest among the most expensive properties as lenders curb their appetite for high debt to income ratio lending, he added.

Dwelling values in Australia have fallen for 12 straight months, down 2.7 per cent from the peak in September last year as tougher credit rules, increased supply and subdued wage growth combine to put an end to Australia's housing boom.

Still, that's "hardly a crash" as the decline is slower than the last fall between June 2010 and February 2012, according to CoreLogic.

Then, national dwelling values fell by 3 per cent in the first 12 months, declining 6.5 per cent from peak to trough.

As for Sydney and Melbourne, values remain over 40 per cent higher in the two markets than they were five years ago as the cities benefit from a substantial lift in wealth from the housing boom, Mr Lawless said. BLOOMBERG