Sydney home prices fall 4.6% to 10-month low in February

The Sydney median home price dropped to a 10-month low in February.
The Sydney median home price dropped to a 10-month low in February. PHOTO: BLOOMBERG

SYDNEY (BLOOMBERG) - The Sydney median home price dropped to a 10-month low in February after record values and a regulatory clampdown that tightened lending standards crimped demand.

The median dwelling value in Australia's largest city dropped to A$730,000 (S$731,000) from A$765,000 a month earlier, falling for a third consecutive month, data from researcher CoreLogic Inc showed on Tuesday (March 1). The measure touched a record A$800,000 in October, according to the data.

The decline is just another indicator of waning demand for Sydney homes that have seen their values surge 78 per cent since the end of 2008. Banks raised interest rates for the first time in five years in 2015, doubled the minimum purchase price contribution by a borrower and tightened the way in which they assess the repaying capacity, denting mortgage demand.

Growth in outstanding mortgages slowed to 7.3 per cent in January from 7.4 per cent a month earlier, marking the first time in three years the measure declined for two consecutive months, Reserve Bank of Australia data showed on Monday.

Sydney's 4.6 per cent median price drop in February was double that of the national average and much higher than the 2.7 per cent decline for Melbourne, the nation's second-largest city.

Sydney prices increased 0.5 per cent last month, under CoreLogic's Hedonic home value index methodology, which attempts to smooth out the "compositional bias" associated with median pricing, the research firm said.