House prices have fallen for the first time in a year, possibly in part from a reaction to the federal government’s tight budget.
In Australian capital cities in May, Australian house prices slumped by 1.9 per cent which is actually the biggest fall since late 2008.
Melbourne recorded the biggest falls, slumping 3.6 per cent followed by Adelaide and Brisbane which both fell around 1.7 per cent.
The fall goes against the recent tide of solid house price gains, and could well be linked to falling consumer confidence, which as mentioned, took some hits in the budget with cuts to welfare and pensions and higher living costs.
ANZ senior economist David Cannington told The Age the government’s budget appears to have had an affect on the housing sector.
“Despite strong auction listings in the past week, home buyer demand has eased in the past month with auction clearance rates falling towards long-term averages following a period of significant outperformance,” he said.
Consumer sentiment has fallen to its lowest levels since August 2011 according to the Westpac-Melbourne Institute Index of Consumer Sentiment.
RP Data research director Tim Lawless pointed to seasonal factors when he also spoke to The Age, saying home prices often cool during winter months, but the low consumer confidence was a noticeable correlation.
“There is a very strong correlation between levels of consumer confidence and housing market activity,” he said.
“If we see sentiment levels remaining low it is likely that housing market activity will be more sedate.”