(Photo by Rusty Jarrett/Getty Images)

This is from today’s Corelogic Property Market Indicator:

Minus signs!

And we’re seeing them week after week now for Sydney and Melbourne.

You can also see that annual house price growth in Sydney and Melbourne is down to 11% and 12% respectively, well down on the rates of 18%+ we have seen regularly in this data series recently.

There are clear signs of price growth easing. This is a welcome tap on the brakes as the previous price appreciation was clearly unsustainable.

You can see the impact in the aggregate house price index, which has fallen ever so slightly thanks to the moderation in Melbourne and Sydney along with the impact of the downturn in Perth.

Source: CoreLogic

But let’s look a little more closely at that chart.

Source: CoreLogic

This time of the year sometimes brings little downturns. And when it has happened previously, the market has regathered subsequently and resumed its momentum.

There was a minor resurgence in auction clearance rates over the weekend, particularly in Sydney, where 81% of properties found a buyer.

At this level, buyer activity is far from the levels where prices level off, never mind go backwards.

Time to break out one of my favourite charts, from the Australian economics team at Deutsche Bank, showing the relationship between clearance rates and house price growth. I’ve added in a mark for the 80% clearance rate just seen in Sydney.

Source: Deutsche Bank

The property market is cooling, but prices are still growing and at a much faster rate than wages and consumer inflation.

For there to be a real levelling off in annual price growth, we’re going to need to see sustained negative numbers in the weekly house price data and probably lower auction clearance levels.

Deutsche Bank’s research pointed out that, historically, year-on-year house price falls are associated with clearance rates of 45% for Sydney and 55% for Melbourne.

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