Data released by RP Data shows that capital city dwelling values fell for the first time in 12 months, retreating 1.9% in May.
Except for Perth, Darwin and Canberra, all other capital cities recorded a fall in May, with Melbourne recording the biggest fall of 3.6% followed by Adelaide 1.8%, Brisbane 1.7%, Sydney 1.1% and Hobart 0.6%.
Good news for first home buyers
ABS figures show that the percentage of loans being taken by first home buyers hit a record low of 12.3% in November last year and has barely improved since then. The slowdown is good news for first home buyers who have retreated over the past 18 months due to strong competition from cashed up investors.
Good news for mortgage holders
The result is also good news for mortgage holders as it removes one of the more immediate concerns for the RBA of unsustainable growth in some segments of the housing market. The RBA is now more likely to leave rates on hold for the foreseeable future.
RP Data research director Tim Lawless says the drops in values are most likely caused by seasonal influences.
“Historically, housing market conditions have softened in April and May as the market rebalances from what is typically a seasonally strong first quarter and also as a result of cooler climatic conditions during the autumn and winter months.’’
Mr Lawless says he has also noticed signs of the housing market approaching or hitting the peak of its growth cycle.
He says with affordability becoming more “challenging” and rental yields reducing in Australia’s two largest cities, Sydney and Melbourne, he wouldn’t be surprised if growth slowed more throughout the year.
The full RP Data results for May 2014 can be viewed here.