The CoreLogic Home Value Index recorded a recovery from the 1.1% fall in May, with a 1.8% rise in capital city dwelling values over the month of June. According to CoreLogic head of research Tim Lawless, “This stronger month-on-month reading can be partially explained by the seasonality in the monthly growth rates. Adjusting for this effect suggests an easing trend in housing value growth has persisted through the second quarter of 2017. This trend towards lower capital gains across the combined capitals index is mostly attributable to softer conditions across the Sydney housing market, where quarter-on-quarter growth was recorded at 0.8% over the June quarter; down from 5.0% over the March quarter. In contrast, the quarterly trend in Melbourne has been more resilient, with growth easing from 4.2% over the March quarter to 1.5% over the three months ending June.”
Weaker auction results are further evidence of slowing housing market conditions. Slower housing market conditions also reflected in the annual pace of capital gains.
Market slowing, not crashing.
“Although growth conditions have lost momentum across the largest housing markets, we are yet to see any signs of a material downturn. The key drivers for a slowdown have been gradual. They include: mortgage rates pushing higher despite a steady cash rate, lender credit policies tightening up and housing affordability – which remains a significant barrier for many prospective buyers. Additionally, higher supply levels in the unit market appear to be creating a drag on the performance of the unit sector in specific segments.”
“The impact of macroprudential measures announced by APRA at the end of March are still flowing through to mortgage rates and credit policies. We are likely to see further tightening and repricing around investment lending and interest only lending over the coming months,” Mr Lawless said.
“There is a possibility some of the slack created by less investment in the Sydney housing market could be taken up by first home buyers taking advantage of stamp duty concessions that go live on July 1, however if this is the case, it’s likely to be
temporary as higher first-time buyer demand could simply push prices outside the range applicable to the concession.”
Source: CoreLogic Australia