Seasonality and more moderate housing market conditions combined in May to send capital city dwelling values down 1.9 per cent for the month,Tim Lawless, research director at RP Data, said.
“Historically, housing market conditions have softened in April and May as the market rebalances from what is typically a seasonally strong first quarter, and also as a result of cooler climatic conditions during the autumn and winter months,” he said.
“Outside of the seasonality, we have been seeing signs that the housing market is at or approaching the peak of the growth cycle,” added Mr Lawless.
With affordability becoming more challenging and rental yields substantially compressed across Australia’s two largest cities, Mr Lawless said it is likely growth trend will moderate further over the year.
A recent deterioration in consumer confidence reported in the Westpac/Melbourne Institute Consumer Sentiment Index may also be playing a role in the winding down of housing market conditions.
"There is a very strong correlation between levels of consumer confidence and housing market activity,” said Mr Lawless.
"If we see sentiment levels remaining low it is likely that housing market activity will be more sedate,” he added.