CoreLogic: The housing boom slows in April.
Australia’s housing boom is showing signs of slowing down despite the record low interest rates and a solid economic recovery.
The rapid pace of house price of house price growth in Australian cities may have run out of steam, according to CoreLogic’s research director, Tim Lawless.
CoreLogic’s national home value index reveals that house prices grew at a slower pace in April as higher stock levels and affordability worries dampened demand, Australian housing values lifted by 1.8 percent in April with the monthly pace of capital gains easing from a 32-year high in March. Darwin saw the largest month-on-month price jump in house prices at 2.7 percent. Sydney house prices rose 2.4 percent last month, Melbourne’s prices were up 1.3 percent and Brisbane prices increased 1.7 percent.
This compares to CoreLogic’s April figures which show a marked drop on the 2.8 percent recorded in March. In that month Sydney house prices jumped 3.7 percent with values in Melbourne and Brisbane rising 2.4 percent.
Although growth conditions have slowed, Lawless, is quick to point out that housing values are still rising at fast clip - up 6.8 percent over the past three months to be10.2 percent higher than the Covid-hit low in September last year.
However, he warned the pace of capital gains could slow further over the coming months.
“The slowdown in housing value appreciation is unsurprising given the rapid rate of growth seen over the past six months, especially in the context of subdued wages growth, he argued. “With housing prices rising faster than incomes, it’s likely price-sensitive sectors of the market, such as first home buyers and lower-income households, are finding it harder to save for a deposit and transactional costs.”
Fewer first-time buyers
Lawless said there is evidence of fewer first-time buyers in the market. he noted the government statistician reported a 4 percent fall in the value of first home buyer home loans through February, the first drop since May last year.
The property specialist also said the number of fresh listings added to the housing market has shown a substantial lift relative to the past two years.
Around 40,630 new residential property listings were added to the market nationally over the four weeks ending April 25; substantially higher relative to the previous two years and almost 14 percent above the five-year average.
“However, despite the slowdown, housing market conditions remain geographically broad-based with every capital city and ‘rest-of-state’ region continuing to record a lift in dwelling values over the month."
In terms of annual growth, the four smallest capital cities recorded double-digit annual growth for the year to April 2021. Adelaide reported 10.3 percent growth, Hobart 13.8 percent, Darwin 15.3 percent, and Canberra 14.2 percent reflecting a smaller impact from the coronavirus as well as an earlier start to the growth phase last year.
Oversupply of high-rise apartments
CoreLogic data showed that the broad trend of houses outperforming the unit sector continued through April amidst an over-supply of high-density housing across some inner-city precincts.
In all cities, house values have risen on average at 8.6 percent - double the pace of unit values at 4.3 percent over the first four months of the year.
“A preference shift away from higher-density housing during a global pandemic is understandable, however a rise in flexible working arrangements also seems to be supporting greater demand for houses around the outer-fringes of capital cities.
"Relatively weak investor activity, compounded by a supply overhang in some high-rise precincts, is also dampening price growth in unit markets,” Lawless concluded.