The May CoreLogic home value index has been released today and it showed that national dwelling values dropped by 0.1% during the past month.
National dwelling values have fallen by 0.4% over the past year, annual national dwelling values haven't been negative since October 2012, according to Corelogic.
Sydney has continued to post a decline in value, with May's change showing a drop in price of 0.2%. Sydney is now down 0.9% for the quarter and down 4.2% over the past year.
Melbourne was the worst-performing city in May, it fell by 0.5% in May and it's down 1.2% over the past three months. This is the largest three-month decline since February 2012.
However, other cities managed to post growth. Brisbane prices grew by 0.2% for the month, Adelaide prices increased by 0.5% and the Hobart price increased by an impressive 0.8%.
Rounding out the other cities, Perth went down slightly by 0.1%, Darwin declined by 0.2% and Canberra decreased by 0.1%.
Regional locations continue to outperform capital cities. The combined capital city price declined by 0.2%, but the combined regional price increased by 0.2%.
Corelogic's head of research, Tim Lawless, said "The negative headline growth rate is a symptom of weakening housing conditions across the capital cities, led by Melbourne and Sydney where previously, capital gains were nation-leading. Sydney and Melbourne comprise approximately 60% of Australia's housing market by value, and 40% by number, so the performance of these two cities has a larger effect on the headline market performance."
The Royal Commission's inspection of the banks appears to be having an effect on the market. Anecdotally, would-be borrowers are finding it harder to get approval for loans from Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group (ASX: ANZ).
Foolish takeaway
It's hard to say what house prices will do over the next 12 months, but I'd wager they're more likely to be down than up from the current level.
Global interest rates are rising, foreign buyers are withdrawing and banks are getting stricter – these are three of the main reasons why prices could continue falling over the next few months or even years.
