City housing prices to keep falling as stock grows stale

Housing prices in Australia’s two largest cities are falling at the fastest pace for several years.

Jake (with Max), Jill and Jeff Williams are selling up in Ryde, where prices have fallen 9.4 per cent in the past 12 months. Picture: Hollie Adams

Housing prices in Australia’s two largest cities are falling at their fastest pace for several years and are likely to stay weak in the traditionally busy spring season as more stock lingers on the market.

Five of the eight capitals recorded lower housing prices for August, led by Melbourne and Perth, where values fell 0.6 per cent, according to CoreLogic.

The once white-hot Sydney market has been falling for the past 12 months and dropped a further 0.3 per cent this month.

Sydney’s 5.6 per cent annual fall is the steepest since March 2009, when values also fell 5.6 per cent, while Melbourne’s annual fall of 1.7 per cent is the worst since October 2012, when values lost 1.8 per cent.

Prices have been trending lower amid regulatory clamps on bank lending and buyer exhaustion, and the market is tipped to stay subdued.

“Our expectation is that the spring selling season’s going to be pretty quiet this year,” CoreLogic research analyst Cameron Kusher told The Australian.

“You’re already in Sydney and Melbourne seeing a lot more stock on the market than 12 months ago.”

Other banks could follow Westpac in lifting mortgage rates, slowing demand further, he said.

Nine of the 10 weakest capital city subregions were in Sydney, led by the Ryde area where prices fell 9.4 per cent in the past year.

In Ryde, Jeff and Jill Williams are selling their family home of more than 20 years to move closer to Jill’s mother in Coffs Harbour.

“We thought it might be time to capitalise before the market falls continue,” Mr Williams said. “Around Ryde everything’s the two-storey project home type thing, so people that like something with a bit of character have been interested in our house.”

McGrath sales agent Michael Dowling said buyer demand in the area was still high but buyers had more choice and were taking longer to decide.

“In Ryde, it’s back to a normal real estate market,” he said. “Even though we have seen what we’re calling a price correction, properties are still selling.”

AMP Capital chief economist Shane Oliver expected prices to fall further, warning that a fear of missing out was turning to “fear of not getting out” for investors.