Property Insight – Housing Update
The property market is clearly cooling as a result of deterioration in affordability due to higher prices and marginally higher mortgage rates.
Property market cooling and building has peaked
Australian capital city dwelling prices, as measured by the CoreLogic RPData Hedonic Home Value Index, rose 0.9% in January and are down 0.6% over the past three months.
Melbourne reversed some of the prior weakness to record a rise of 2.5%, while price rises in Sydney were more modest at +0.5%. Over the past three months prices in Brisbane, Perth, Hobart and Canberra have risen but are negative in the other capitals.
Over the past year, capital city dwelling prices are 7.4% higher, driven by strong gains in Sydney (+10.5%) and Melbourne (+11.0%), however the national annual rate of growth in property prices continues to slow from peak of 11.5% in April 2014. Although January is usually a quiet month for home sales, auction clearance rates at the end of the month were at about 60%, similar to rates seen in December.
The property market is clearly cooling as a result of deterioration in affordability due to higher prices and marginally higher mortgage rates. A recent NAB Residential Property Survey suggests that price rises in 2016 will be about 1% with Queensland and Victoria expected to be the strongest markets.
On the supply side, in trend terms, total residential building approvals remain flat to negative, with approvals having peaked in NSW, WA and Victoria but strengthening in Queensland and possibly also South Australia.
Source: Thomson Reuters Datastream
For more information refer to: Australian housing market update – February 2016