If you’re a glass half full kind of person, you may be able to put a good spin on the latest news on Australia’s property market. But it’s a stretch.
Data from CoreLogic shows that national house prices still fell in February, but by less than they did in January or December.
That’s making another rate cut by the Reserve Bank of Australia all the more likely. Though with the cash rate already at the historic low of 1.5%, any further cuts will see the RBA use up most of its meagre remaining fire power.
Down, down, down
Last month, the medium home price fell by 0.7% to $524,278, nationally.
According to CoreLogic, it was a level last seen in September 2016.
And despite the bounce in Sydney and Melbourne’s auction clearance rates, plus a continued slowing in momentum in monthly price declines, it seems we haven’t seen the end of things yet.
AMP Capital chief economist Shane Oliver has his doubts of early stabilization in the market.
Instead, he predicts an overall 25% top-to-bottom fall in Sydney and Melbourne — with prices bottoming out next year.
‘Ongoing home price falls in Sydney and Melbourne will depress consumer spending as the wealth effect goes in reverse and so homeowners will be less inclined to allow their savings rate to decline further,’ he said.
‘It’s also a negative for banks and is consistent with our view that the RBA will cut the cash rate to one per cent by year end, starting around August.’
He additionally said that pricing weakness has hit levels lower than when the RBA started cutting rates in 2008 and 2011.
Food for thought there.
Prices to bottom out in 2020
Below you can find a list of monthly, quarterly and yearly property movements:
Sydney: -1.0%, -4.1%, -10.4%
Melbourne: -1.0%, -4.1%, -9.1%
Perth: -1.5%, -3.5%, -6.9%
Darwin: -1.7%, -5.1%, -5.3%
Brisbane: -3.0%, -0.7%, -0.5%
Canberra: -0.2%, 0, 3.4%
Adelaide: flat, -0.1%, 1.0%
Hobart: 0.8%, 1.1%, 7.2%
And finally, overall:
National: -0.7%, -2.7%, -6.3%
CoreLogic’s head of research, Tim Lawless, blames tightening credit for decreased buying activity in regions which had previously flourished.
What are property prices looking like now?
Hobart is currently the only capital city to record a rise in February, and in the quarter.
Data shows the city has lifted 1.1% over the last three months, to $457,186. It’s also the annual leader with a 7.2% rise.
However, as expected, Sydney housing prices have led the decline.
They’re down 10.4%, to an average of $789,339 — remarkably, the city’s first double digit annual decline since the early 1980s, according to AAP.
Melbourne follows closely behind — dropping by 9.1% to $629,457.
And Mr Lawless says double digits are also on the horizon for Melbourne.
Additionally, the demand for rental properties, across every Australian capital save Darwin, has prompted weekly rents to push higher over the last month.
We’re not out of the mud yet.
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