Australia's property sector has been a diamond in the rough for an ailing economy, however in the wake of Prime Minister Tony Abbott's slash and burn budget, house prices have endured the largest monthly fall in five years with the federal budget shouldering the blame for the coinciding drop in consumer confidence.
This week's release of the RP Data-Rismark's home value index has surprised analysts with residential property prices in Australia's capital cities retracting 1.9 percent in May -- and within the context of Australia's bullish property sector a dramatic twist not seen since far back in December 2008.
According to the influential Master Builders Australia, the latest building approvals similarly shows the need for the Abbott government to clarify its post budget growth strategy to boost the homebuyer and investor confidence.
The decline has mirrored stuttering consumer confidence which has not yet recovered from the release of a budget that Treasurer Joe Hockey said would "end the age of entitlement," a budget noted for its deep cuts to welfare, pensions, a debt tax and higher petrol and medical expenses.
"The 5.6 percent drop in total dwellings approved, seasonally adjusted in April, is largely due to a 14 percent decline in approvals for other dwellings (including apartments) which followed previous strong growth in units and apartments over the past 12 months," Peter Jones Chief Economist of Master Builders Australia told Xinhua.
ANZ senior economist David Cannington agreed in a note that the property market may have become an unexpected casualty of the budget.
"Despite strong auction listings in the past week, home buyer demand has eased in the past month with auction clearance rates falling towards long-term averages following a period of significant outperformance," Cannington said.
Sydney has remained the leading capital city for auctions -- recording a clearance rate of 77.1 percent -- compared to a national clearance rate of 68.3 percent, comparing well with 2013, good news for builders and buyers alike.
There were 3,037 auctions held compared to only 1,845 in capital cities this time last year.
The Master Builders suggest the natural property cycle, if managed well from the policy position will return the market to its natural rise.
"Builders are confident the slight cooling in the rapid rise in approvals in recent months sets the scene for a more sustainable upswing without risking input cost inflation," he said.
"Whilst the latest building approvals data does not foreshadow the end of the upturn in residential building, confidence is crucial and Master Builders calls on the Government to continue implementation of measures to grow the economy to ensure that the Budget's structural repair initiatives do not unduly dampen sentiment," Peter Jones said.
CommSec's chief economist, Craig James told Fairfax media that the readjustment was likely triggered by the federal budget, but was overdue in any case.
"Home prices couldn't lift forever. At some point there had to be a correction and it seems the federal budget caused people to pause and take stock," James said.
Richard Grainger, a property analyst and director of the Sunrise Property Group told Xinhua that the fundamental strengths remain in place.
"A strong first quarter is almost a tradition here, with softer autumnal conditions a natural progression. Once the readjustment has taken effect, the fundamentals should continue to drive opportunities across Sydney and other major urban centers," he said.
"There are certainly the usual signs the market is within striking distance of the peak growth cycle."