There are increasing signs that Australia’s housing market is steadying despite the continuing rise in dwelling values, with the Sydney housing market leading the slowdown.
In a research note from Corelogic, national dwelling values increased by 0.5 per cent in the third quarter 2017 -- their slowest quarterly rate of growth since the June 2016 quarter.
Corelogic’s Cameron Kusher said, “The 8.0 per cent rise in values nationally over the year was also the slowest rate of growth since February 2017. Although values are continuing to rise, they are doing so at a slow rate.”
There is a growing disparity between the growth performance of the two largest capital cities. Sydney dwelling values increased by 0.2 per cent over the September 2017 quarter which was the city’s slowest quarterly rate of growth since May 2016.
Melbourne dwelling values increased by 2.0 per cent which is down from the recent peak rate of quarterly growth of 4.8 per cent in November 2016 but is still well in excess of Sydney’s growth.
Over the past 12 months, Sydney, Melbourne and Hobart have recorded double-digit value growth while values have also risen in Brisbane, Adelaide and Canberra. Values have fallen over the year in Perth and Darwin.
The recent slowing of value growth nationally comes on the back of a strong phase of growth which has been led by Sydney and Melbourne. The surge in dwelling values has occurred against a back-drop of low inflation, low mortgage rates and historically weak income growth and as a result, housing affordability has deteriorated substantially in Sydney and, to a lesser extent, in Melbourne."
SQM's Louis Christopher recently forecast that the rate of property price increases will be slower in 2018, predominantly due to a slowdown in the Sydney housing market, which should continue into the first half of the year. Melbourne’s property market will also experience a relatively modest slowdown.