The Australian property market has notched 17 consecutive months of declines.
House prices in Sydney and Melbourne fell another 1 per cent in February to bring their annual declines to 10.4 per cent and 9.1 per cent respectively, CoreLogic data released on Friday show.
"That's the largest annual fall we've ever seen for Melbourne and for Sydney we'd have to go all the way back to 1983 to see a larger fall of 11.5 per cent," said CoreLogic head of research Cameron Kusher.
While the pace of decline eased slightly compared with December and January, national dwelling values fell another 0.7 per cent, bringing the total decline to 6.8 per cent since their October 2017 peak.
"You see larger declines over Christmas and New Year because there is less activity, but in saying that a national 0.7 per cent fall is still pretty large, annualise that over the year it comes to 8.4 per cent," Kusher said.
Sydney and Melbourne house prices have now fallen 13.2 per cent and 9.6 per cent from their respective peaks in July and November 2017. For Sydney it marks the worst fall since the 1980s recession and Melbourne the worst since the early 1990s recession.
"It's not great news if you own a home or if you bought over the last two or three years in Sydney and Melbourne, but if you're looking to get into the market obviously things are getting more affordable," Kusher said.
The combined capitals are now 8.6 per cent down from their September 2017 high, worse than their GFC decline of 7.6 per cent.
But Kusher pointed out prices in Sydney and Melbourne were still 26.1 per cent and 27.5 per cent higher than they were five years ago.
"Just as the boom was concentrated in Sydney and Melbourne over the period from 2012 to 2017, so too is the post-2017 bust," AMP Capital chief economist Shane Oliver said in a client note. "But other cities are looking pretty soft too and Perth and Darwin have been falling for nearly five years."
Hobart was the only city to record price increases in February — dwelling values there increased 0.8 per cent to a median of A$457,186 ($475,941). Adelaide was flat on A$432,946.
Sydney was down 1 per cent to A$789,339, Melbourne 1 per cent to A$629,457, Brisbane 0.3 per cent to A$490,635, Perth 1.5 per cent to A$438,952, Darwin 1.7 per cent to A$397,867 and Canberra 0.2 per cent to A$594,351.
CoreLogic said while the February results marked a "subtle improvement" in the rate of decline, the housing market downturn was now "more widespread geographically and we aren't seeing any indicators pointing to the market bottoming out just yet".
Last month, research firm LF Economics warned that prices "could fall by half" and by 20 per cent in 2019 alone. Other experts generally predict total peak-to-trough declines in Sydney and Melbourne of around 20-30 per cent.
Oliver said the recent slight rise in auction clearance rates was typical for February and he was "doubtful" the slowing pace of declines was a sign the market was close to stabilising.
"A bit like a delayed Santa rally, clearance rates always bounce around a bit and a bounce was likely at some point as sooner or later sellers would start to accept more realistic prices," he said.
Oliver said the negatives driving the falls remained in place, including tight credit conditions that "will be given another boost from mid-year by the start-up of Comprehensive Credit Reporting which will see banks crack down on borrowers with multiple undeclared loans".
There is also the looming A$120 billion rollover of interest-only to principal-and-interest repayments, "record unit supply, an 80 per cent or so collapse in foreign demand, questions about building quality following recent building problems", Labor's proposed tax changes and falling prices feeding on themselves".
"Taken together these are driving a perfect storm for the Sydney and Melbourne property markets," he said. "In these cities we continue to expect a top to bottom fall in prices of around 25 per cent spread out to 2020. So there is more to go yet."
Kusher said house price relief would likely come in the form of an RBA rate cut and relaxed lending restrictions by APRA.
"The RBA is pragmatic enough to see if (falling house prices are) sucking consumption out of the economy, it may need to cut interest rates," he said.
APRA may also be "tapped on the shoulder" and told, "you're telling the banks they have to assess these loans on a rate above 7 per cent, but we haven't been at 7 per cent for years".
"Don't discount policy changes happening," he said. "There have been plenty of examples of housing busts (in other countries), the RBA and APRA know if you can avoid one of those you should."