Australia’s house price growth slows in June; to ease further this year

House price growth in Australia slowed slightly in June, taking a break from the gains in previous months. A two-speed market continues, with further acceleration in prices in Sydney, whereas most other capital cities recorded sluggish prices. It is not surprising that the prices declined at the national level, given it followed strong growth in many key markets in recent months, said ANZ in a research report.

For instance, prices in Melbourne dropped 0.3 percent in June. This does not counter the cumulative growth of 6.5 percent recorded in April and May. In the meantime, Perth continues to be in doldrums, with prices down 4.5 percent as compared to one year ago. With additional drop in mining-relating jobs and construction that are yet to come across the state, the near-term outlook is not expected to provide much respite, added ANZ.

Meanwhile, house credit growth continues to slow given decline in investor activity. Investor debt has been increasing gradually as compared to the owner-occupier segment since September 2015. This is likely to persist as lenders tighten the criteria of borrowing for investors, particularly to overseas purchasers. Slowdown in credit growth, along with flat auction clearance rates, indicates slowing price growth throughout the remainder of 2016, according to ANZ.