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Growth rates cool off in May

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Capital growth rates were below expectations over the past month, with many capitals seeing activity ease, new data from onthehouse.com.au shows.

In the period, houses in Australia experienced growth of 0.36 per cent while units dropped by 0.23 per cent.

In Sydney, growth stalled over May, with values increasing by just 0.24 per cent.

Values fell in Melbourne over the month by 0.03 per cent.

While Perth had the worst growth rate for houses over the month, with values dropping by 1.9 per cent, country Western Australia saw the highest growth, at 2.38 per cent.

Meanwhile, units grew the most in the Northern Territory, rising by 1.53 per cent, and fell the most in country Tasmania, dropping by 2.73 per cent.

Onethehouse.com.au consulting analyst John Edwards said slower growth was beneficial for the economy because certain markets had reached “boom-like” conditions.

“Housing markets, particularly Sydney, were moving to a boom-like performance. This was dangerous and could have led to a bubble and a severe correction if it continued,” he said.

“The slowing of the market at this point in time suggests we are going to avoid this outcome.”

Nonetheless, he warned investors the Sydney market remained concerning.

“The Sydney market is still overvalued and in reality, too expensive,” he said.

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