Australian house prices grew by 1.3% in November, the slowest rate of growth this year according to the monthly CoreLogic report which again raised the question of is the boom going to slow or end.
The monthly rise was down from 1.9% in October and less than half the maximum 2.8% rise seen in March of this year.
If that happens though, the slowing or steadying will be at record levels – November’s rise took the 12-month gain to more than 22% and adding approximately $126,700 to the median value of an Australian home.
Real estate agents say there are signs of a cooling with auction clearance rates falling over the since October, but there’s also been a tightening of lending rules by banks, thanks to a modest move by the key regulator, APRA and plenty of ‘jawboning’ from the Reserve Bank and others about the overheated nature of the market – which it is, but has been for more than a year.
There’s also new fears that the Covid Omicron variant might hit confidence or force sales back on line, but on the other hand, if the variant is a real threat, the Reserve Bank will keep its enormous support spending and interest rates lower for longer to support demand and the wider economy, and housing. And if that happens, there should be plenty of funds to finance a bit more of the boom.
The monthly CoreLogic property price data showed Sydney and Melbourne’s price growth slowing but regional areas continue to see much faster growth – especially in NSW.
Sydney house prices increased 1% to $1,360,543 while apartments increased 0.7% to $837,169. In Melbourne house prices increased 0.6% to $986,992 while apartments increased 0.5% to $626,449.
Property prices in regional areas increased 2.2%, double the 1.1% rate across the cities.
CoreLogic research director Tim Lawless said in Wednesday’s announcement almost every factor driving housing values up had “lost some potency”.
“Fixed mortgage rates are rising, higher listings are taking some urgency away from buyers, affordability has become a more substantial barrier to entry and credit is less available,” Mr Lawless said.
There has been a significant rise in auction activity and a softening clearance rate in recent weeks.
There has also been an overall surge in homes listed for sale, which Mr Lawless said was a significant factor slowing the market. There was a surge in new listings in November pushing the market to its highest level since 2015.
“We expect inventory levels will continue to normalise into 2022 which should see selling dynamics gradually shift away from vendors, providing buyers with some additional leverage at the negotiation table,” he said.
Sydney and Melbourne have also been affected by affordability pressures and the lack of interstate and overseas migration.
Regional NSW property prices increased 2.4% over the month, with regional Victorian prices up 1.8%.
The strongest performing capital city was Brisbane, where house prices jumped 3.2% to $757,194. Canberra house prices increased 0.8% to $999,755.
Sydney house prices are up 29.1% over the year, while Melbourne house prices are up 18.1% But regional NSW and Victorian house prices are up 34.2% and 28.9% respectively.