House prices keep falling in November: Sydney down 1.4% and Melbourne down 1%

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.

5 Companies we like better than ANZ Bank

When ace stock picker Scott Phillips has a buy recommendation, history suggests it can pay to listen.

Scott recently revealed what he believes are the five best ASX stocks for investors to buy right now… and ANZ Bank wasn’t one of them! That’s right — he thinks these 5 stocks are even better buys.

See the 5 stocks

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.