Australian property prices saw their first annual fall for over six years in May, as real estate markets continue to cool in the major cities.
According to the latest data released by property consultant CoreLogic in its index, Australian property prices for the combined capital cities fell by 0.1 per cent in May, after a 0.4 per cent fall in April.
As a result, Australian property prices nationwide fell by 0.4 per cent year-on-year, the first annual decline seen since 2012.
Tougher rules from regulators coupled with lenders raising borrowing standards have caused the previously hot property markets in Sydney and Melbourne to cool, which despite regional prices continuing to rise has caused the national drop.
The Reserve Bank of Australia has also expressed concern that debt-fuelled speculation in property could ultimately hurt both consumers and banks, and this has led to banks tightening standards on investment and interest-only loans, whilst raising the interest charged on some mortgage products.
Sydney and Melbourne comprise about 60 per cent of Australia’s housing market by value and 40 per cent by number.
Prices in Sydney dropped by 0.2 per cent in May, making a year-on-year reduction of 4.2 per cent.
Melbourne prices fell by 0.5 per cent over the same period, contributing to an annual fall of 2.2 per cent.
CoreLogic Head of Research Tim Lawless said: ‘The negative headline growth rate is a symptom of weakening housing conditions across the capital cities, led by Melbourne and Sydney, where previously capital gains were nation-leading.’
Outside of the major cities the property markets were more positive. Australian property prices not including the major cities rose by 0.2 per cent in May, making an annual rise of 2.2 per cent.
Top performer again was Hobart, the capital of Tasmania, where the year-on-year rise in property prices reached 12.7 per cent.
Overseas property investors considering Australia may be wise to leave the major cities alone at the moment and concentrate on other areas.