Below trend growth to continue
In November we’ve seen small declines in dwelling prices in Sydney and Melbourne with auction clearance rates falling to 60% along with average selling time. Reversing recent trends, prices in other metros rose in November.
In November, Australian capital city dwelling prices, as measured by the CoreLogic RP Data Hedonic Home Value Index, fell 1.5% and are down 0.5% over the past three months. Melbourne saw the largest fall with a monthly decline of 3.5%, while prices in Sydney fell 1.4%.
Reversing past trends, prices in Brisbane, Perth and Adelaide rose in November. Over the past year capital city dwelling prices are 8.7% higher, driven by strong gains in Sydney (+12.8%) followed by Melbourne (+11.8%), however, the annual rate of growth in property prices has slowed from peak rate of 11.5% in April 2014.
Auction clearance rates have declined to about 60% while the average selling time and vendor discounting rates continue to rise off recent lows. The property market is clearly cooling as a result of deterioration in affordability due to higher prices and marginally higher mortgage rates. Additionally, tighter lending standards has also seen a decline in investor participation in property purchases from 54% of all purchases in May 2015 to 45% at the end of September.
On the supply side, in trend terms, total residential building approvals continue to decline from their March peak but at a slower rate of decline than in prior months due a rebound in apartment approvals in NSW, Victoria, and South Australia which are showing some degree of resilience.
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