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Tuesday 16

October, 201811:39 PM



Property prices could keep falling

Property prices could keep falling

Weaker house prices in Melbourne and Sydney have continue to drag on the property market, which has now marked 12 months of consistently falling prices.

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By AAP 01.10.2018 03:07 PM

A likely tighter lending environment following the banking royal commission is expected to drive property prices down even further, with national house values registering 12 months of consistent losses.

Property consultant CoreLogic's national home value index showed a broadening of the housing market correction, with national values down 2.7 per cent in September since peaking 12 months ago.

The commissioner's interim report released on Friday contained no draft recommendations, but CoreLogic's head of research Tim Lawless said the home lending system has been let down by a failure to enforce existing laws.

He said regulators will be more assertive with regulation already in place and house prices will fall further.

"We've already seen tighter credit policy has been, in our view, the primary driver of the slowdown, particularly the reduction in investment activity," Mr Lawless told AAP.

"If it becomes harder to get a loan or if more segments of the market place are restricted from credit, then absolutely that should have a further dampening affect on the market."

House values were lower in five of the eight capital cities last month, but Mr Lawless said it was weakening conditions in Melbourne and Sydney, down 0.9 and 0.6 per cent respectively for the month, that continue to weigh heaviest.

"While the housing market downturn is well entrenched across Darwin and Perth where dwelling values remain 22.1 per cent and 13.2 per cent lower relative to their 2014 peak... Sydney and Melbourne are now the primary drag on the national housing market," he said.

Sydney's annual loss has tipped over six per cent for the past 12 months, while Melbourne has dropped 3.4 per cent.

"Not only are these among the largest annual falls across the capital cities, but considering (they) comprise approximately 60 per cent of the national value of housing... (they) have a substantial drag down effect," Mr Lawless said.

Perth and Darwin have lost 2.8 and 3.7 per cent respectively for the year but prices in Hobart, however, are going the other way, up 0.4 per cent in September and 9.3 annually.

Prices in the nation's capital have also bounced with Canberra prices up 0.3 per cent for September and two per cent for the year.

Losses might not have been as severe in regional housing markets over the past year but the latest data shows a slowdown could be afoot.

The combined regional dwelling values were down 0.2 per cent in September and 0.9 per cent for the quarter, but posted an annual gain of 1.2 per cent.

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