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A downswing in housing prices is being led by sharp declines in Sydney and Melbourne, with values dropping in five of the eight capital cities.
Dwelling values fell 1.3 per cent nationally in July, marking the third consecutive monthly drop, according to CoreLogic Data.
Prices have dipped two per cent from April’s peak, although most homeowners remain ahead after an almost 29 per cent national surge in values during the pandemic.
Despite the monthly declines, capital city house prices were up 5.4 per cent over the past year while regional prices were 17 per cent higher.
Sydney experienced the biggest monthly drop in prices with a 2.2 per cent decline.
Prices fell 1.5 per cent in Melbourne and Hobart, 1.1 per cent in Canberra and 0.8 per cent in Brisbane, marking the first time the Queensland capital has gone into the red in two years.
Perth, Adelaide and Darwin bucked the trend, recording monthly growth rates of between 0.2 and 0.5 per cent.
CoreLogic research director Tim Lawless said house price growth was already slowing before recent interest rate rises, but markets had weakened sharply since the first rate hike in May.
“Due to record high levels of debt, indebted households are more sensitive to higher interest rates, as well as the additional downside impact from very high inflation on balance sheets and sentiment,” he said.
Economists expect the Reserve Bank of Australia to lift interest rates by 50 basis points to 1.85 per cent this month after annual inflation came in at 6.1 per cent in the June quarter, the fastest yearly increase in more than 20 years.
Mr Lawless said the rate of decline in property prices was comparable to that at the start of the global financial crisis in 2008, while Sydney was seeing the sharpest drop in prices in nearly 40 years.
Regional housing markets have also weakened with national prices down 0.8 per cent for the month.
Homes in regional NSW led the decline with a 1.1 per cent decrease in prices, while regional South Australia properties recorded the highest growth at 1.1 per cent.
(Australian Associated Press)