SYDNEY, Sept 3 (Reuters) - Australian home prices slipped for the 11th straight month in August as losses in Melbourne accelerated while Sydney remained weak, data showed on Monday, a trend that could worsen given upward pressure on mortgage rates at some banks.
Property consultant CoreLogic said its index of home prices nationally dropped 0.3 percent in August, from July, leading to an annual fall of 2.0 percent.
Values in the combined capital cities fell 0.4 percent in the month and 2.9 percent for the year. Prices outside the cities eased 0.2 percent in August, but were still 1.6 percent higher on a year earlier.
“Weaker housing market conditions can be tied back to a variety of factors, foremost of which is the tighter credit environment which has slowed market activity, especially amongst investors,” said CoreLogic head of research Tim Lawless.
Regulators have clamped down on risky lending by banks, particularly for interest-only loans, while a raft of scandals across the industry has added to the air of caution.
Westpac last week also raised its mortgage rates to protect profit margins in the face of higher funding costs in the wholesale market.
The slowdown has been greatest in Sydney where prices were down 5.6 percent on the year, though Melbourne was starting to catch up with an annual drop of 1.7 percent.
Sydney and Melbourne comprise about 60 percent of Australia’s housing market by value and 40 percent by number.
The weakness was concentrated in the premium sector of the housing market in Sydney and Melbourne, with less expensive property faring much better, noted Lawless.
“Stronger market conditions across Australia’s more affordable areas are likely attributable to a rise of first home buyers in the market as well as changing credit policies focused on reducing exposure to high debt-to-income ratios,” he added. (Reporting by Wayne Cole Editing by Eric Meijer)