Australian house prices plummet, Sydney suffers worst month in 40 years

FILE PHOTO – Properties can be seen in the Sydney suburb of Clovelly, Australia July 19, 2015. REUTERS/David Gray

SYDNEY, Aug 1 (Reuters) – Australian house prices fell for a third month in July and the pace quickened as Sydney suffered its worst decline in nearly 40 years amid rising housing costs. borrowing and cost of living crisis.

Figures from property consultancy CoreLogic released on Monday showed prices nationwide fell 1.3% in July from June, after falling 0.6%. Prices were still 8.0% higher for the year, reflecting the huge gains made in 2021 and early 2022.

The weakness was concentrated in the capitals where prices fell 1.4% in July, while annual growth slowed to 5.4% after being above 20% at the start of this year.

The decline in Sydney accelerated as values ​​fell 2.2% during the month, while Melbourne lost 1.5%. Annual growth in Sydney has slowed to just 1.6%, a far cry from the heady days of 2021 when prices rose by a quarter.

“Although the housing market has only been down for three months, the National Home Value Index shows the rate of decline is comparable to the onset of the global financial crisis in 2008 and the sharp drop in the early 2000s. 1980s,” CoreLogic’s research said. director, Tim Lawless.

“In Sydney, where the downturn has particularly accelerated, we are seeing the biggest decline in value in almost 40 years.”

Other cities also started to see declines with Brisbane at 0.8%, Canberra at 1.1% and Hobart at 1.5%.

Even regions began to cool as prices fell 0.8%, ending a long bull run as people moved to country living and greater space.

The decline partly reflects higher borrowing costs as the Reserve Bank of Australia (RBA) has raised rates for three consecutive months and is seen as certain to raise them again this week in a bid to contain the surge in inflation.

Markets are betting that the current exchange rate of 1.35% could rise to 3.40% by the middle of next year. The big banks have also sharply increased borrowing costs for new fixed-rate mortgages and tightened lending standards.

A sustained drop in prices would be a drag on consumer wealth as the notional value of Australia’s 10.8 million homes rose by A$210 billion ($146.52 billion) in the first quarter to 10, 2 trillion Australian dollars.

($1 = 1.4333 Australian dollars)

Reporting by Wayne Cole; Editing by Sandra Maler

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