(Bloomberg) -- Sydney’s housing boom is over, according to online real estate listing firm Domain.
House prices grew just 3.2 percent in the three months ending Sept. 30, less than half the pace of the previous quarter and the slowest quarterly rate since March 2014, Domain said in a report published Thursday.
“The extraordinary house price growth Sydney has recorded over the last three years is now clearly receding,” the firm’s senior economist Andrew Wilson said in the report, titled “Boom is Over.” Housing markets across the nation are likely to experience moderate to modest growth over the remainder of 2015 and 2016 as the impact of previous interest rate cuts wanes and income growth remains subdued.
The report echoes warnings from economists and analysts that Sydney’s surging housing market is cooling. Researcher CoreLogic Inc., which says Sydney home values climbed 44 percent in the three years to September, reported Monday that auction clearance rates in the city fell to a 10-month low of 66.6 percent for the week ending Oct. 18.
Economists from Macquarie Group Ltd. and Bank of America Merrill Lynch are predicting a fall in prices over the next two years because of increasing supply and lower-than-expected population growth. The central bank said last week that Australia’s over-heated housing market could be starting to slow, while rapid home construction in some areas is creating an oversupply.
SQM Research Pty. said Monday that Sydney homes were overvalued by 40 percent and it expects price growth to slow to between 4 percent and 9 percent in 2016.
While mortgage rates are at a five-decade low, Westpac Banking Corp., the second-largest mortgage lender, said last week it will raise rates by 20 basis points.
House price growth also moderated last quarter in Melbourne, the nation’s second-largest city, increasing 2.8 percent compared with a 6 percent gain in the June quarter, according to Domain.
Meanwhile, homes in some Australian mining towns have lost almost three quarters of their value after the country’s resource boom peaked and commodity prices plunged, according to CBRE Group Inc.
House prices in Queensland, home to much of Australia’s coal output, recorded the steepest declines as mine closures wiped out jobs, CBRE said in a report Wednesday. Home values fell 73 percent in Dysart and 71 percent in Moranbah in just three years, the property services and investment firm said.