Sydney house price falls gather pace in November

The slowdown in the Sydney housing market has intensified, with prices slipping 0.7pc in November, extending recent falls.

Barangaroo Headland with boats passing through Sydney Harbour. (Supplied: Destination NSW)

The slowdown in the Sydney housing market has intensified, with prices falling at a faster clip during November than in recent months, as the effect of lending clamps becomes clearer.

Sydney dwelling values have fallen 0.7 per cent over the month so far, according to property researcher CoreLogic.

The drop is faster than a 0.5 per cent fall in October, a 0.1 per cent fall in September and a flat result in August.

The heat has been coming out of the Sydney market after prudential regulator APRA earlier this year moved to limit new loans to interest only borrowers, following its previous restrictions on the growth in lending to investors.

Buyers had also become exhausted in the face of spiralling price growth and aggressive bidding at auctions.

Nationally, dwelling values are down 0.1 per cent over the month although the fall is influenced by the large Sydney market.

Melbourne prices are still rising, up 0.5 per cent for the month so far, the same pace of growth as in October.

CoreLogic senior analyst Cameron Kusher said affordability was stretched, more properties had been put up for sale and investors were finding it more difficult and expensive to take out a mortgage, all of which was weighing on the market.

The previous round of clamps on investor lending in late 2014 had also slowed the Sydney market, but the difference this time was that the extra interest rate cuts that had fuelled the market last time were unlikely to be repeated, he said.

The falls this month could have been even worse if the NSW government hadn’t removed stamp duty for properties priced up to $650,000, with discounts for homes up to $800,000, he said.

“That could have lessened the slowdown, because first homebuyer numbers jumped,” Mr Kusher said.

Melbourne had been more resilient as investors were not as active there, prices looked affordable compared to Sydney, the economy was strong and Victoria was seeing significant interstate migration.

“It’s not unreasonable to expect there could be some falls in the not too distant future for Melbourne, just because values have been rising for a very long time,” Mr Kusher said.