House prices start to slip in Sydney & Melbourne Following a rapid rise in Sydney (+19%) & Melbourne (+16%) house prices during the year to March, house prices have begun to slip. According to CoreLogic Home Value Index Sydney home prices have fallen 2.2% and Melbourne prices have fallen 2.3% since the peak in mid-April. While our economics team has recently ‘called the top’ of the housing cycle, we believe it is still too early to call this a correction in house prices. However, if prices continue to moderate (more than a seasonal slowdown) during June and July, the risk of a negative feedback loop may rise, especially as APRA’s Macro Prudential tightening of mortgage underwriting standards takes effect.
Note that if that outlook plays out then it is consistent with approximately a rerun of 2011/12 and -5% house price growth…
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
