The CoreLogic May Home Value Index results out last week confirmed that the capital gains trend has slowed over recent months.
According to CoreLogic Head of Research Tim Lawless, Australia’s capital cities saw a cooling of housing market conditions over the seasonally weak month of May with the CoreLogic hedonic home value index reporting a -1.1% fall in dwelling values across the combined capitals. The month-on-month fall was largely the result of declines in Sydney and Melbourne, where dwelling values have recorded significant gains over the current growth cycle to date.
Mr Lawless said, “Adding to the complexity in reading the current market is the recent Australian Prudential Regulation Authority (APRA) announcements at the end of March for a new round of macroprudential measures aimed at slowing the pace of interest only lending.”
Subsequently, he said, “Mortgage rates are continuing to trend higher, particularly for investors. Another factor that is likely contributing to slower growth conditions is a dent in consumer confidence.”
Other market indicators suggest a slower pace of growth such as a reduction in market activity, a moderating trend in auction clearance rates and rising advertised stock levels.