SYDNEY, March 1 (Reuters) - Australian home prices continued their long slide in February as credit conditions stayed painfully tight, though the pace of decline did slow a little as more auctions found buyers.
Friday's report from property consultant CoreLogic showed home prices nationally fell 0.7 percent in February, from January when they dropped 1 percent. Values were down 6.3 percent on a year earlier.
The index has fallen in 14 of the past 16 months, wiping out more than two years of gains. Values in the combined capital cities fell 0.9 percent in February, after a 1.2 percent dive the previous month.
The slower pace of decline came as auction clearance rates have picked up in the last couple of weeks, particularly in the hardest-hit markets of Sydney and Melbourne.
While prices fell 1 percent in both cities in February, that was again an improvement on January's steep drops.
"The results marked a subtle improvement in the rate of decline, however the housing market downturn is now more widespread geographically and we aren't seeing any indicators pointing to a bottoming out just yet," said Tim Lawless, head of research at CoreLogic.
Any improvement would be welcomed by the central bank, the Reserve Bank of Australia (RBA), which is concerned that a further steep drop in prices could undermine household wealth and spending. housing stock is valued at A$6.8 trillion ($4.83 trillion), or almost four times the country's annual gross domestic product.
It is also a headache for the Liberal National government of Prime Minister Scott Morrison, which faces an election in May and is trailing badly in opinion polls.
Just this month, the RBA said the risk from housing could mean the next move in interest rates might be down instead of up. Rates have been held at a record low of 1.5 percent since mid-2016 and the bank had argued the next move would be upward.
The RBA holds its March policy meeting next week, just a day before figures are forecast to show the economy grew sluggishly in the fourth quarter of last year. of the drag on housing has come from banks which, scalded by a spate of scandals, have toughened their lending criteria and lifted mortgage rates on many products, particularly for investors.
The impact has been evident. Data out on Thursday showed the amount of outstanding home loans rose at the slowest monthly pace in more than four years in January, while the annual pace was the weakest since 1984. home loans are easily the biggest business for the major banks and there are signs of an easing in stance.
Australia and New Zealand Banking Group Ltd ANZ.AX this month said it may have been "overly conservative" on mortgages and pledged to lend more to investors. = 1.4092 Australian dollars)