The first monthly fall in house prices in 17 months in June has signalled aggressive interest rate increases over the last year have successfully cooled off what had emerged as a source of instability in the economy.
The RP Data-Rismark Hedonic Home Value Index fell a seasonally-adjusted 0.7% in June versus May, but rose a seasonally-adjusted 0.1% in the second quarter from the first quarter. From a year earlier, capital city house prices were a seasonally-adjusted 10.5% higher, according to the report.
Also, housing credit growth slowed to 0.4% in June from 0.6% in May and rates twice as high earlier in the year, according to the RBA. If sustained, annual housing credit is on track to drop sharply in coming months.