(Bloomberg) -- Australia's property slump deepened in February, as stricter lending standards dry up the flow of credit to investors and home-buyers.
- National housing prices declined 0.7 percent last month, and are now down 6.8 percent from their peak in October 2017, according to CoreLogic data released Friday.
Key Insights
- Sydney and Melbourne, which led the way up, continue to lead the way down. Dwelling values in both cities fell 1 percent last month and Sydney prices are down 10.4 percent from a year earlier -- the first double-digit annual decline since the early 1980s.
- The long-running reduction in investor lending has hit the two biggest cities hardest, given investment activity was concentrated there. Now, a tightening of owner-occupier loans is spreading the slowdown across the nation, according to CoreLogic's head of research Tim Lawless.
- In the wake of widespread scrutiny of lax lending standards during an inquiry into financial industry misconduct, banks are moving to a ‘new normal' for mortgage lending, Lawless said. Closer scrutiny of people's expenses and ability to service a loan are reducing the maximum amount someone can borrow.
- Other factors are helping drive down prices. Among them: increased supply, a build-up of houses on the market as properties take longer to sell, fewer foreign buyers and weak consumer sentiment.
Read More
- Australian Home Lending Is Now Weakest Since Reagan-Thatcher Era
- This Is What's Killing Australia's Property Boom
- ANZ Bank's Mortgage Book Shrinks After Lending Rules Tightened
To contact the reporter on this story: Peter Vercoe in Sydney at pvercoe@bloomberg.net
To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, Edward Johnson
©2019 Bloomberg L.P.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
