(Bloomberg) -- The high end of the Sydney and Melbourne housing markets are leading the coronavirus-induced property downturn in Australia, according to CoreLogic Inc.
“The stringent government response to Covid-19 has undoubtedly placed the property market at the cusp of another downswing,” Eliza Owen, head of Australia research at CoreLogic, said in a report released Friday.
Nationally, home prices fell 0.4% in May, and preliminary indicators for June show the rate of decline has “gathered some momentum,” Owen said. “The most expensive part of Sydney and Melbourne seem to be leading the current downswing,” she said.
Read more: Australia Housing Not the One-Way Road to Riches It Once Was
In Melbourne, the top quartile of houses -- those worth A$959,500 ($661,000) or more -- declined 1.3% in May, compared with a 0.6% drop across the middle of the market, and a 0.3% decline in the lowest quartile, the report showed.
In Sydney, the most expensive houses (worth more than A$1.35 million) fell 0.6% last month, compared with a 0.4% decline in the middle of the market, and a 0.1% increase across the lowest end, CoreLogic said.
While central bank research has found more expensive property can be most reactive to changes in interest rates, “the performance of property markets amid Covid-19 suggest the high-end of the market may also be more responsive to negative economic shocks,” Owen said.
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