Australia's home building boom is running out of steam, with house prices going into reverse on an annual basis for the first time since 2012 and the rate of properties sold at auction near a five-year low.
National housing prices fell 0.1 per cent in May, taking the annual loss to 0.4 per cent, which was the first time values have fallen on annual basis since October, 2012, according to property data firm CoreLogic.
CoreLogic head of research Tim Lawless says tighter credit availability and a high number of units being built despite weakening foreign investor interest are key factors behind the decline.
"The most significant driver of this turnaround has been tighter credit availability, particularly for those borrowing for investment purposes," he said.
"Additionally, a high number of units remain under construction, with demand impacted by fewer foreign buyers and less domestic investment in the market.
Sydney posted a 4.2 per cent annual drop in housing values in the year to the end of May, while Melbourne values grew by 2.2 per cent.
But in the past three months, Melbourne has overtaken Sydney as the weakest capital city housing market, while Hobart was the best performer.
The rate of properties sold at auction remains near a five-year low amid weak selling conditions, with a clearance rate of 59.7 per cent last week.
Meanwhile, there was a sharper than expected fall in approvals for the construction of new homes in April, dropping five per cent according to the Australian Bureau of Statistics, compared with analyst forecasts of a three per cent decline.
Approvals were still up about two per cent annually, but are now far weaker than the double-digit increases seen in 2017.
CAPITAL CITY PRIVATE TREATY MEDIAN PRICES:
Sydney - house $900,000, unit $698,800
Melbourne - house $741,500, unit $555,000
Brisbane - house $540,000, unit $400,000
Adelaide - house $455,000, unit $315,000
Perth - house $510,000, unit $380,500
Hobart - house $441,650, unit $318,250
Darwin - house $511,000, unit $400,000
Canberra - house $637,500, unit $412,000
Source: CoreLogic Property Market Indicator Summary week ending May 27, 2018.
