December was not a good month for housing prices in Australia as it stalled due to tighter lending rules and higher mortgage rates. Sydney has been mostly affected as it loses momentum although the differences seem varied across other major cities.
According to CNBC, home values have further slowed down to 7.8 percent, from 8.2 percent the month before while the cycle peak was recorded at 11.5 percent, based on the figures provided by property consultant CoreLogic RP Data.
In Sydney where the slow was mostly felt, prices fell by 1.2 percent in December and down by 2.3 percent for the fourth quarter. The silver lining is that overall; the prices were still up by more than 11 percent as a whole last year.
Major cities such as Melbourne, Brisbane and Perth all fared better and saw gains in December. According to Financial Review, Perth's recovery of 2.3 percent was a surprise.
RPData's head of research Tim Lawless says, "The wealth created from housing in Sydney and Melbourne has been exceptional over the past twelve months."
In addition, he said, "It's only a month, we won't see consistent rises in Perth. Values there are still down over the quarter and year to date. I expect to see the 2.3 per cent increase get clawed back over the next quarter."
To further support his statement, median values for Sydney homes rose by around A$82,000 for the year to A$800,000 ($583,000), while Melbourne put on A$60,400 to A$610,000.
Regulators aim to keep the annual growth loans at ten percent or preferably less, hence there's a tightening of lending standards for property investments, CNBC continues. Even major Australian banks have made announcements pertaining to the increase of mortgage rates, pointing the blame to regulatory costs that have also become higher.
On the other hand, Reserve Bank of Australia (RBA), which has been worried that increase borrowing for home investment may lead to a bubble, has welcomed the cooling in prices.
