Calm before the storm? Housing market loses momentum, but pressure still remains
Momentum has been sapped from the Australian real estate market but an improving outlook for interest rates could bolster confidence among prospective buyers and maintain upward pressure on home prices.
Houses are seen in the Brisbane suburb of Paddington. (AAP Image/Darren England)
National home prices posted their 18th consecutive gain in July, up 0.5 per cent but three capital cities were down for the month and the pace of growth has slowed.
Thursday’s home value update from real estate data firm CoreLogic followed an agreeable June quarter inflation print that diffused talk of interest-rate hikes and brought cuts back into view.
The annual rate of headline inflation accelerated in June – rising to 3.8 per cent, up from 3.6 per cent – but this was broadly in line with expectations.
The all-important trimmed mean gauge came in a little below expectations however, allaying fears underlying inflation was gathering pace.
CoreLogic head of research Eliza Owen said the inflation figures supported the case for a hold when the Reserve Bank of Australia meets in August and were broadly a “good news story for housing demand”.
“With growth in the national home value index already slowing, another rise in interest rates would have almost certainly put more downward pressure on demand,” she told AAP.
“If the cash rate holds steady, this could create greater confidence among prospective buyers.”
Property prices slumped 7.5 per cent when interest rates started going up in May 2022 but property markets have since shrugged off high borrowing costs and gained 13.5 per cent – consistently finding new record highs since November 2023.
In July, mid-sized capital cities continued to grow strongly with dwelling values rising 1.1 per cent in Brisbane, two per cent in Perth and 1.8 per cent in Adelaide.
Home buyers were faring better in Melbourne, Hobart and Darwin, with prices down in all three cities across the month.
Property values have fallen 0.9 per cent in Melbourne in the past three months.
A separate index compiled by PropTrack similarly recorded a slower pace of national home price growth in July, which the firm’s senior economist, Paul Ryan, in part chalked up to a quieter time of year.
“Strong housing demand pushed prices higher despite more homes being listed in what is a higher interest-rate environment,” he said.
Slow construction activity, above-average income growth and July’s tax cuts also contributed, Mr Ryan said.
“Further home price growth is expected over the coming months as the market moves into the traditionally busier spring selling season,” he said.
