Home prices post first annual fall in six years

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Home prices across Australia’s major cities weakened for an eighth straight month in May as tighter lending standards at banks cooled demand in Sydney and Melbourne – although regional markets continued to tick higher.

Property consultant CoreLogic said on Friday its index of home prices for the combined capital cities slipped 0.1 per cent in May, after a 0.4 per cent dip in April. That left nationwide prices down 0.4 per cent for the year, the first annual decline since October 2012.

House prices continue to soften.

House prices continue to soften.

Photo: Rob Homer

Along with tougher rules from regulators, lenders have also been raising their borrowing standards amid revelations of widespread malpractices on loans and financial advice among several big banks and institutions.

The result has been a marked pullback in demand in Sydney and Melbourne, ending the five-year property boom.

“The negative headline growth rate is a symptom of weakening housing conditions across the capital cities, led by Melbourne and Sydney, where previously capital gains were nation-leading,” noted CoreLogic Head of Research Tim Lawless.