Australia house prices fall, Sydney suffers worst month in 40 years

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

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SYDNEY (Reuters) – Australian home prices fell for a third month in July and accelerated as Sydney suffered its worst fall in nearly 40 years amid rising borrowing costs and a cost-of-living crisis.

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

The weakness was concentrated in the capitals with prices down 1.4% in July, while annual growth slowed to 5.4% after exceeding 20% ​​early this year.

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The decline in Sydney gained momentum with values ​​down 2.2% in the month, while Melbourne lost 1.5%. Sydney’s annual growth stalled to just 1.6%, a long way from the strong days of 2021 when prices rose by a quarter.

“Although the housing market has only been three months in decline, the National Home Value Index shows that the rate of decline is comparable to the onset of the global financial crisis in 2008, and the sharp decline in the early 1980s,” CoreLogic Research said. Director Tim Lawless.

“In Sydney, where the deflation has particularly accelerated, we are seeing the largest drop in value in nearly 40 years.”

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

Even areas are starting to cool off with prices dropping 0.8%, ending a long rally as people switch to rural living and more space.

The decline partly reflects higher borrowing costs as the RBA has raised interest rates for three consecutive months and is sure to raise again this week in an attempt to contain rising inflation.

Markets are betting that the current 1.35% liquidity ratio could reach 3.40% by the middle of next year. Big banks have also sharply raised borrowing costs on new fixed-rate mortgages and tightened lending standards.

The continuing drop in prices will be a drag on consumer wealth as the face value of Australian homes of $10.8 million rose A$210 billion ($146.52 billion) in the first quarter alone to A$10.2 trillion.

($1 = 1.4333 Australian dollars)

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Reporting from Wayne Cole. Editing by Sandra Mahler

Our Standards: Thomson Reuters Trust Principles.

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