(Bloomberg) -- Australian house prices fell for a third month in July and risks are “skewed to the downside” with government wage support and mortgage holidays set to taper off in coming months.
Property values in major cities fell 0.8% last month, CoreLogic data released Monday showed. The slide was led by Sydney and Melbourne, which is at the center of a surge in coronavirus cases that has forced the government to declare a state of disaster and impose an overnight curfew.
While home prices have so far remained resilient during the pandemic -- falling just 1.6% from the most recent peak in April -- the market has been propped up by record-low interest rates, government incentives for first-time buyers and loan relief for distressed borrowers, said Tim Lawless, head of research at CoreLogic.
“As stimulus measures wind down and borrowers taking a repayment holiday face up to their debt, it's logical to expect a rise in distressed properties coming onto the market,” Lawless said. “Further virus outbreaks present a clear and present danger to the depth and length of the recession, and the performance of the housing market.”
Melbourne was the worst hit of the major cities, with home prices falling 1.2% in July. The decline could accelerate, with the city of 5 million people now under tighter restrictions, including the nighttime curfew.
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