Australia Home Prices Fall, Dragged Down by Sydney, Melbourne

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Australian house prices fell for a fifth month, as declines in Sydney and Melbourne outweighed a nascent recovery in the rest of the country.

House values in major cities dropped 0.2% last month, CoreLogic Inc. data released Thursday showed. Prices in Melbourne, which is in its third month of lockdown after a resurgence in coronavirus cases, declined 0.9% last month, to be down 5.5% since the pandemic started.

In Sydney, prices fell 0.3% in September. Home values rose in the rest of the country, where virus restrictions are not as stringent, led by a 0.8% gain in Adelaide and a 0.5% increase in Brisbane.

“Unsurprisingly, the markets where the virus has been well contained and economic activity is less restricted are faring the best,” said Tim Lawless, head of research at CoreLogic. “At the other end of the spectrum, the considerably weaker conditions across Melbourne provide an example of the impact of severe restrictions.”

The outlook for the property market is evenly balanced between emerging headwinds and tailwinds, Lawless said. For buyers, borrowing has never been cheaper with interest rates at record-lows. A relaxation oflending regulations may allow easier access to credit.

“The aggregate effect of low mortgage rates, and theprospect that rates could fall further, low inventory levels, government incentives and improving consumer sentiment seems to be outweighing the negative economic shock brought about by the pandemic,” Lawless said.

On the other hand, the winding down of government support for people who have lost their jobs, and a likely rise in forced or distressed sales in coming months as mortgage holidays come to an end could weigh on prices, he said.

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