Australian home prices fell 0.7% in February according to new figures released by CoreLogic as the recent downward trend extended beyond the major cities of Sydney and Melbourne to other areas of the country. The latest decline means prices are now 7% lower compared to the peak boom period.

The new data showed Darwin had the biggest fall last month with a 1.7% slump during the 28 days, while Perth was not far behind with a 1.5% fall. CoreLogic’s head of research Tim Lawless noted that ‘every market’ is now ‘losing steam’, but Sydney and Melbourne have seen the most notable slump during the last twelve months.

Sydney’s prices are down 10.4% compared to the same period a year earlier, while Melbourne has seen a 9.1% decline year-over-year. Both of the two big capitals on the east coast had previously seen a sharp rise in prices, but the property boom now appears to be over for good for now.

A case study for the recent price malaise is Brisbane, which did not hit the heights of either Sydney or Melbourne but has still seen notable declines, both on a month-by-month and annual basis. The only capital city to see a rise in home prices in February was Hobart, which climbed 0.8%. It has also logged a 7.2% year-over-year uptick.

Lawless said the fact that price falls are not only affecting the once-booming markets in Sydney and Melbourne but other regions around the country is a clear sign that less favorable lending conditions are weighing down the property market. He believes other factors are also dampening enthusiasm.

Lawless added: ‘We’ve seen a lot of new supply coming into the market from newly constructed housing, especially in the high-rise apartment sector. We’ve seen a real slowdown in foreign buying activity and, of course, we’re also still seeing affordability challenges in markets like Sydney and Melbourne, despite the fact that values have come down in Sydney now by 13% and in Melbourne by nearly 10% since the peak.’

However, apartment prices have remained relatively steady in Melbourne, where there has been a modest 3.7% decline. Perhaps surprisingly, house prices have plummeted 11.5% in the Victoria state capital and Sydney. In contrast, Darwin and Perth are among the cities that have seen steeper declines in apartment prices in recent months.

Supply of units is generally increasing across the country, but Mr. Lawless noted that while new properties are being put up for sale, homeowners are not as eager to enter the market due to the downward trend in prices and challenging conditions. He said various factors have resulted in a surplus for inventory levels.

Lawless said: ‘Compared to last year, the number of new listings being added to the market is down by nearly 20% across the capital cities. But, because properties are taking longer to sell, and we’ve seen buyer numbers fall by around 15% or so over the past year, it means total inventory levels out there are now very high.’

Lawless admits the prices are unlikely to level out and stabilize this year, and that further falls are inevitable as the market needs to go lower to balance supply and demand as more properties go on sale. He believes ‘somewhere in 2020’ will be the point that the market bottoms out before rising.

Lawless concluded that there are ‘a lot of moving parts’ in play, with interest rates also set to have an impact. He said: ‘But the big question there is, even if interest rates do come down, how much will we see the lenders passing those rate cuts on and how much effect will it have on the market?’