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By Swati Pandey
SYDNEY, July 1 (Reuters) - Australian home prices showed early signs of bottoming out in June with values in the biggest markets of Sydney and Melbourne inching up for the first time since 2017 as sentiment was boosted by mortgage rate cuts by banks.
Monday’s report from property consultant CoreLogic showed home prices in Sydney inched up 0.1% last month, from May, marking its first monthly rise since July 2017. In Melbourne, prices rose 0.2%, recording the first increase since November 2017.
That left national values down 0.2% in June from May when they eased 0.4%. The pace of decline has gradually slowed since December when prices slid 1.1%.
“Potentially we are seeing the first signs that the top end of Sydney and Melbourne’s housing markets are leading the recovery trend,” said CoreLogic’s head of research, Tim Lawless.
“Anecdotally, we are hearing positive news from real estate groups that numbers for open homes and inspections are up, and lenders are taking more enquiries from interested borrowers. Overall, it looks like the tide may have turned for the housing market.”
The revival will be welcomed by Australian policymakers who are hoping a lift in home values would boost consumer sentiment and stimulate demand in the economy.
Home prices in Australia have been in free fall since late-2017, eroding household wealth and weighing on consumer spending. That is a major reason the Reserve Bank of Australia (RBA) cut its benchmark cash rate to an all-time low of 1.25% last month and is seen likely to ease again at its policy meeting on Tuesday.
On an annual basis though, prices are still down 8% nationally, nearly 10% in Sydney and more than 9% in Melbourne.
Analysts at Morgan Stanley said they were looking for a sustained rebound in auction clearance rates above 60%, an increase in monthly home prices, higher auction volumes and a jump in mortgages for signs of improving housing market sentiment.
Housing loan growth at Australia’s major banks was still at record lows, climbing around 2.2% in May from a year ago, although official figures out last week showed some signs of stabilisation there too.
And auction data was also pointing to some signs of life with clearance rates in Sydney at 72% and 70.6% for Melbourne, a strong rebound from the low 50%-60% range seen in recent months.
“The result suggests clearance rates are continuing to improve, from the low- to mid-60s to the mid- to high-60s range,” said Matthew Hassan, a senior economist at Westpac. “If this proves to be a sustained move it would be broadly consistent with modest price gains.”
Reporting by Swati Pandey; Editing by Sam Holmes