SYDNEY (REUTERS) - Australian home prices suffered their sharpest monthly fall in July since late 2011 as declines gathered pace in Sydney and Melbourne sank into the red, data showed on Wednesday (Aug 1).
Property consultant CoreLogic said its index of home prices nationally dropped 0.6 per cent in July from June, leading to an annual fall of 1.6 per cent.
Values in the combined capital cities fell 0.6 per cent in the month and 2.4 per cent for the year.
The slowdown has been greatest in Sydney, where prices were down 5.4 per cent in the year to July, while Melbourne eased 0.5 per cent. Declines were sharpest in the most expensive segments of the housing market, while the more affordable sectors suffered much less.
Sydney and Melbourne comprise about 60 per cent of Australia's housing market by value and 40 per cent by number.
Demand has been sapped by tougher regulations on bank lending and by a general rise in borrowing standards amid revelations of widespread malpractice in the financial sector.
Many small to medium-sized banks have also recently raised rates on some mortgage products, blaming higher wholesale funding costs, although the major banks have yet to move.
The pullback in prices comes after years of stellar growth.
"Since peaking in September last year, the Australian housing market has recorded a cumulative 1.9 per cent fall in value; a relatively mild downturn to date considering values remain 31 per cent higher than they were five years ago," said CoreLogic head of research Tim Lawless.