Australian home prices rose again in September, albeit at a slower pace than earlier this year, in a further sign that the red-hot property market is losing steam.
Residential property values in the country climbed 1.5 per cent in September, about half the rate seen at this year's peak in March, according to CoreLogic Inc. data released Friday. Still, the market is up 20.3 per cent over the past year, with the annual growth rate tracking at the fastest since the year to June 1989.
Rapid growth in house prices this year has kept first-time homebuyers out of the market, and Tim Lawless, research director at CoreLogic, said the slowdown in growth was due to a lack of affordability.
"With housing values rising substantially faster than household incomes, raising a deposit has become more challenging for most cohorts of the market, especially first home buyers," Lawless said in a statement.
Prices in Australia have risen at more than 10 times the pace of wages, raising a major barrier to entry for first-home buyers and fueling momentum for macroprudential measures to contain credit growth and keep a lid on financial risk. The International Monetary Fund last week called for lending curbs to tame red-hot prices, citing financial stability concerns.
Existing owners upgrading their houses or even upsizing haven't been hamstrung in the same way, because they had already built up equity as prices surged, Lawless said. The number of owner-occupier first home buyer loans fell 20.5 per cent between January and July, he said. - Bloomberg