House prices in Sydney have recorded their biggest monthly fall for 14 years and remain on course for one of the steepest drops ever.
Prices in the city fell 1.3% in November, compounding hefty falls in preceding months, according to figures from data researcher CoreLogic.
Melbourne, where prices have slumped 0.9% this month, is not far behind. Prices in Brisbane edged up by 0.1%, while Adelaide was flat.
The grim outlook for the property market was compounded on Friday by figures showing a continued fall in housing credit.
The peak-to-trough fall in Sydney is now expected to be about 15%, representing the biggest reduction since CoreLogic began logging the numbers.
“The biggest fall was 9.6% in the last recession, 1989-91,” CoreLogic’s head of research, Tim Lawless, told the Australian. “It looks like this downturn will be the largest and longest since our records started.”
Lawless pinned the blame for the fall firmly on the tightening of mortgage credit over the past two years while increased supply – especially of apartments – poor affordability and falling demand from overseas buyers were also factors.
The Reserve Bank of Australia data on housing credit showed that lending to owner-occupiers was holding up at annual growth of 7% but lending to investors had collapsed to 1.3%.
JP Morgan economist Tom Kennedy said: “Most of the moderation has come via the investor cohort, where increased regulatory oversight and binding macro-prudential measures have weighed on new borrowing and driven annual growth to an anaemic 1.3%.”
Australian shares suffered heavy losses after the release of the credit figures with the ASX200 benchmark index ending the day down 91.2 points, or 1.58%, at 5667.
With markets in Japan and Hong Kong firmly in the black, domestic concerns were behind the steep falls. Banking and consumer stocks led the way downwards suggesting market nerves about household spending in the teeth of headwinds from tighter credit and falling house prices.
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