Australian house prices recorded no growth in May as falls in Sydney, Melbourne and Canberra offset continued gains in other capitals and regional markets, sharpening debate over migration, property ownership and the future direction of housing policy.
Cotality’s national Home Value Index was unchanged over the month. Sydney dwelling values fell by 0.9 per cent and Melbourne values dropped by 0.8 per cent, while the ACT recorded a 0.2 per cent decline. Perth and Darwin continued to rise, each gaining 1.5 per cent, while Brisbane and Hobart increased by 0.9 per cent and Adelaide rose by 0.5 per cent.
Regional markets remained stronger than the capitals, with combined regional values rising by 0.6 per cent. The pace of growth, however, was the slowest recorded in a year.
The May figures confirm that Australia’s property market is moving at different speeds. Sydney and Melbourne are now leading the downturn, while more affordable capitals continue to record gains. Higher interest rates, stretched borrowing capacity and weaker buyer confidence are adding pressure across the market.
Economist Stephen Koukoulas said the national result marked a clear change in conditions.
“Zero change in nation-wide house prices in May – 3 cities, Sydney, Melbourne & Canberra are all seeing price falls. Other cities & regional areas recording growth, but the pace of increase is slowing.”
Koukoulas said falling values could have wider consequences for household spending and consumer confidence.
“There will be a huge wealth effect as prices continue to weaken – compounded by higher unemployment & weaker wages growth.”
He forecast a further decline in national prices, while warning that labour market conditions would influence the depth of the correction.
“It looks like we are on track for prices to drop 5 to 7% from here, although the fall could be sharper if the unemployment rate rises to 5% or more.”
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