Sydney’s house prices will see their first decline in 18 months, following strong action from the Australian Prudential Regulation Authority (APRA) to curb rampant growth in investor loans. 

CoreLogic’s data for the first 27 days of April show that Sydney’s house prices have fallen 0.1%, the first decline since December 2015, while Melbourne’s property prices have risen 0.5%, half as much as in the previous month.

The full analysis for April (which could see Sydney’s monthly prices fall 0.2%), is due to be released today. It is likely to be welcomed by the Coalition after Treasurer Scott Morrison urged regulators to clamp down on the “sharp increase in the level of investor credit” fueling the property market. 

“I have been concerned over the last couple of months that the measures that were put in place a few years [ago] have worn off and it is now [time] for the council of financial regulators to determine what the next step is," Morrison said in March. 

While the federal government has begun to manage expectations of the May budget’s housing affordability package, it has maintained it will be a key part of its policy pitch. Viable measures to help first-home buyers pay for a deposit are being carefully considered, while raiding superannuation, adjustments to the capital gains tax concession, and negative gearing appear to have been ruled out. 

On Friday, Jim Chalmers, Labor’s finance spokesperson, told Sky News that “any policy on housing affordability which doesn't make important and considered changes to capital gains and negative gearing has a hole in the middle of it.”

Slower house price growth in the southeastern capitals is likely to be welcomed by the Reserve Bank after it warned that regulators would have to take drastic action to slow Sydney and Melbourne’s runaway housing markets if interest-only loans were not brought back under control.