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Although at a broad level dwelling values are still trending lower across the regions of Australia, the pace of declines eased further in May, continuing a trend that has been evident since the beginning of 2019. Nationally, dwelling values were down 0.4% in May, which was the smallest month-on-month decline since May 2018.

CoreLogic head of research Tim Lawless said, “This improvement is primarily being driven by a slower rate of decline in Sydney and Melbourne where housing values were previously falling at the fastest rate of any capital city. Sydney values were 0.5% lower over the month while Melbourne values were 0.3% lower; the smallest decline in values across both cities since March last year.

“In other cities, where housing market conditions have generally been more resilient to a downturn, the trend is opposite.”

Hobart values have tracked lower for two months running, taking the rolling quarterly rate of change into negative territory for the first time since early 2016, and with Canberra values 0.2% lower over the month, the quarterly rate of growth remains only slightly in positive territory (+0.2%).

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While the pace of value falls eased across some cities, the Australian housing market remains in a geographically broad-based downturn. Adelaide (+0.2%) was the only city to avoid a slip in housing values over the month and in ‘rest-of-state’ areas, South Australia, Tasmania and Northern Territory were the only regions in which values rose in May. In fact, Regional Tasmania is the only broad region across the country where housing values remain at record highs.

The slower rate of decline is also visible in higher auction clearance rates through the month. The last week of May saw Sydney clearance rates break the 60% mark for the first time in a year, while Melbourne clearance rates have held around 60% over three of the past six weeks.

Tim Lawless said, “Although clearance rates remain low relative to several years ago when housing market conditions were much stronger, the improved performance at auction aligns with the easing rate of decline.”

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Since peaking in October 2017, national dwelling values have reduced by 8.2%, with values across the combined capitals index down 10.1% while regional values have been more resilient, falling by 3.0% since peaking. Larger capital city falls have been recorded in Darwin (-29.5%) and Perth (-19.2%), as well as regional WA (-32.5%) where the mining downturn has led to persistently weak economic and demographic conditions. These regions now represent some of the most affordable housing markets around the country; a factor which explains the high proportion of first home buyer participation in these areas. The last time values were this low in Darwin was March 2017, in Perth values were previously this low in April 2006 and values haven’t been this low across regional WA since July 2005.