November was a tough month for real estate in Australia, with new research showing dwelling values went backwards in more than half of the nation’s capital city markets.

According to CoreLogic RP Data’s November Hedonic Home Value Index, five capital cities saw their dwelling values fall over the month, while the remaining three cities saw only slight improvements.

Melbourne was hardest hit during November, with values slipping by 3.5%, while Hobart suffered a 2.5% decline.

Values went backward in Sydney and Darwin by 1.4% and 1.3% respectively, while Canberra saw values slip by 0.5%.

Adelaide was the best performing market over the month, with a 0.7% rise in values.

Brisbane followed that with a 0.6% increase, while Perth’s values rose 0.3%.

The movements mean values across the capital cities fell by a combined 1.5% over November and mean the combined annual rate of growth is almost 3% lower than its peak in the first half of 2014.

“The latest results are now placing downwards pressure on the annual change in dwelling values,” CoreLogic RP Data research head Tim Lawless said.

“The annual rate of growth across the combined capitals index peaked at 11.5% back in April 2014, and has since reduced to 8.7%,” Lawless said.

Sydney maintained the highest annual growth rate at 12.8%, which is down from a peak rate of annual growth of 18.4% in July earlier this year.

Melbourne’s annual growth rate has reduced from a recent peak of 14.2% to 11.8% over the 12 months ending November this year.

Perth and Darwin remain the only two markets to have seen a fall in prices over the year, with the two recording annual decreases of 4.1% and 4.2% respectively.

While the Reserve Bank of Australia has left the official cash interest rate on hold since May, Lawless believes independent increases by lenders have likely contributed to the capital growth slowdown.

“The fact that mortgage rates have risen independently of the cash rate has, in all likelihood, become a contributor to the slowdown in housing market conditions, as well as tighter lending practices evidenced by a recent reduction in lender risk appetite for investment loans and high loan to valuation ratio mortgages,” he said.

“Tighter mortgage servicing criteria across the board and affordability constraints in the Sydney and Melbourne markets are also having an impact on market demand.”

While the slowdown in growth may be welcomed by those who believe affordability has decreased, others in the market may not be so willing to welcome the change.

"Those purchasers who have recently purchased off-the-plan may face challenges at the time of settlement if the valuation of the property is lower than the contracted price, or if mortgage finance is less freely available, or on more expensive terms,” Lawless said.


“This would imply that some buyers may have a higher loan to valuation ratio than anticipated, which could require additional funds to bring the LVR down to a level the lender is comfortable with.”