Housing prices in Melbourne and Sydney continue to fall: Corelogic

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Sydney Homes
Workers renovate a house in the Sydney suburb of Cammeray, Australia, August 3, 2015. Reuters/David Gray

Melbourne and Sydney continue to see housing prices drop, but the rate of decline in prices begins to ease. Sydney prices dropped 0.6 percent while Melbourne and Brisbane prices fell 0.1 percent, according to CoreLogic's hedonic home value index for February.

The index also shows that prices dropped 0.1 percent across capital cities. The rate of decline eased late in the month as seen on the daily index. This was in line with improving auction clearance rates.

CoreLogic said that Melbourne, Sydney and Perth all saw more moderate falls in values throughout February than they did in January. Sydney's auction clearance rates, even across higher volumes, have begun to improve last month. This was the first real month of activity for 2018. Sydney house prices, the most costly in Australia, dropped continuously for the past five months.

The company posted last weekend a 71.7 percent clearance rate across over a thousand auctions about the same as the week before at 74 percent. The rate was higher compared to the first two weeks at 69 percent and 63 percent.

Melbourne’s auction clearance rates looked steadier. Its auctions cleared roughly in the low 70s throughout the month.

Tim Lawless, CoreLogic head of research, said there was no need for immediate action as levers still worked towards a downward correction of the market. The housing market has continued to see soft conditions overall, which results in some slippage in housing values. But the rates of decline have flattened out over the second half of the last month.

Lawless added that the next couple of months must provide a clearer picture as to whether the falls will continue or if the market is stabilising. "Considering the tighter credit environment, the eventual prospect of higher interest rates and ongoing housing affordability constraints, we expect housing market conditions will remain sedate relative to previous years,” the Australian Financial Review reports him as saying.

He added that the reversal in capital gains has been mild to date. Lawless believes that is a clear sign that macro prudential measures have eliminated the heat from the market in a controlled manner.

Over the past month, some lenders have cut rates on investor loans. Such move could possibly indicate that lenders are beginning to entice investors back by freeing up some funds for that segment. National dwelling values have remained flat or have dropped since they peaked in September 2017.