The house prices of Melbourne and Sydney fell heavily in November, adding more pain to the housing market.
National house prices fell 0.7% and the combined capitals prices fell 0.9% in the month of November. The national markets were mostly driven by the 1.4% fall of Sydney prices and the 1% fall of Melbourne prices.
This brings the fall over the last three month to 2.8% in Sydney and 2.4% in Melbourne.
It seems the actions of Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group (ASX: ANZ), National Australia Bank Ltd (ASX: NAB) and Westpac Bank Corp (ASX: WBC) are having an effect on the market.
Since the peak of July last year, Sydney's housing market is down 9.5%. Unless a Christmas miracle happens, Sydney is on track to 'beat' the previous decline record of 9.6% set between 1989 to 1991. Melbourne prices are down 5.8% since the peak a year ago.
However, it wasn't all bad in November for every city. Brisbane and Adelaide prices went up 0.1%, Hobart & Darwin prices increased by 0.7%, Canberra prices grew 0.6% but Perth prices fell 0.7%.
CoreLogic head of research Tim Lawless pointed out that the tightening of finance conditions had been more pronounced with investors, where Sydney and Melbourne had much higher concentrations of investor demand.
Mr Lawless said "Additionally, housing affordability constraints are more pronounced in these markets and rental yields are substantially lower, indicating an imbalance between rental values and dwelling values.
"The ramp up in housing supply has been more pronounced in these markets against a backdrop of slowing demand, and Sydney and Melbourne have also been more affected by the reduction of foreign buying activity."
Foolish takeaway
With auction clearance rates sitting in the low 40% range it suggests that price falls will continue in December. As long as there isn't a large rise in bad debt then the big four banks should cope.
However, at this point I certainly wouldn't want to buy an investment property or ANZ Bank shares.
