Australia’s house price boom is showing signs of flagging after spiking more than 20 per cent in the past year.

The CoreLogic home value index rose 1.49 per cent in October, having steadily lost momentum since hitting a monthly growth peak of 2.8 per cent in March.

Perth recorded its first negative monthly result since June last year, with values nudging 0.1 per cent lower.

At the other end of the spectrum, Brisbane has taken over as the fastest growing market with housing values up 2.5 per cent in October.

House prices nationally were 21.58 per cent higher over the year with over half the country’s capital cities posting an annual growth rate in access of 20 per cent.

CoreLogic research director Tim Lawless says slowing growth conditions are a factor of worsening housing affordability, rising supply levels, and less stimulus. 

He said first home buyers are becoming a progressively smaller component of housing demand as prices continue to outstrip wages growth, while new listings have surged and housing-focused stimulus measures such as HomeBuilder and stamp duty concessions have now expired.

“Combining these factors with the subtle tightening of credit assessments set for November 1, and it’s highly likely the housing market will continue to gradually lose momentum,” Mr Lawless said.

Last month, the Australian Prudential Regulation Authority increased the minimum interest buffer it expects banks to use when assessing the serviceability of home loan applications.

It wants banks to assess applications at a rate three percentage points above the interest rate product being offered rather than 2.5 percentage points previously.

“With lockdowns being lifted, and expectations that the economy will bounce back, APRA considered the balance of risks has shifted such that a timely adjustment to serviceability standards was warranted,” APRA chair Wayne Byres told a Senate hearing last week.

CoreLogic National Home Value Index for October

(month, annual)

National – up 1.49 per cent per cent, up 21.58 per cent

Canberra – up 1.94 per cent, up 25.52 per cent

Sydney – up 1.5 per cent per cent, up 25.23 per cent

Melbourne – up 0.99 per cent, up 16.37 per cent

Brisbane – up 2.54 per cent, up 22.30 per cent

Adelaide – up 2.0 per cent, up 20.07 per cent

Perth – down 0.11 per cent, up 16.37 per cent

Hobart – up 2.0 per cent, up 28.06 per cent

Darwin – up 0.42 per cent, up 19.28 per cent

Combined capitals – up 1.38 per cent, up 20.82 per cent

Combined regional – up 1.87 per cent, up 24.29 per cent

By Colin Brinsden, AAP Economics and Business Correspondent in Canberra, AAP

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