The good news is more people are beginning to view houses as a place to live, rather than an investment cash cow that will double their money.
The bad news is, the trend of falling housing prices looks set to continue. And it poses real risks to the wider economy.
Housing prices in our major cities are looking to decline in value even more — and now, the latest data shows Australian home loans are the next to be affected.
According to RAW, they rose at their slowest monthly pace in more than four years in January, their annual rate being the weakest on record.
It’s been brought around due to the credit tightening by banks, and a sharp fall in housing prices pushing down demands.
According to Data taken from the Reserve Bank of Australia on Thursday, housing credit rose by 0.2% in January over the previous month, signifying the slowest increase since October 2015.
The annual price of housing credit clocked at 4.4%.
An impending crash bigger than imagined?
Vendors are starting to offer large discounts on their original asking prices in order to sell properties — Sydney is currently recording more reductions than during the 2008 global financial crisis.
With vendors starting to bend, it’s becoming obvious that we haven’t seen the end of this drop just yet — which is looking to drastically effect consumer spending and economic growth.
The average discount in Sydney currently sits at 7.5%, up from 4.8% a year ago — and the largest since February 2006, according to CoreLogic data.
Whereas, in Melbourne, discounting sits at 7.0%, being the biggest on record.
In the five years leading up to late 2017, housing prices in Sydney and Melbourne broadly doubled — but have since fallen more than 8%.
What are we in for next?
‘This highlights just how weak housing market conditions are and how few buyers there are,’ CoreLogic analyst Cameron Kusher said.
Additionally, Kushner said:
‘With housing market conditions continuing to deteriorate, buyers thin on the ground and a high volume of stock listed for sale, it is reasonable to expect that over the coming months vendor discounting may increase further.’
It seems plausible from the data that prices will continue to decline.
And the results have delivered a ‘significant uncertainty’ for Australia’s central bank.
So, if you think we might have seen the end of these trends, think again.
And if you’re in the market for a new house, perhaps keep the money in your pocket a little longer.
You might need it.
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