AUSTRALIA’S property market is “slowing, not crashing”, with capital city dwelling values reversing May’s dip to record a 1.8 per cent rise in June, according to research firm CoreLogic.
The June result comes after a 1.1 per cent decline in May, but was marked by weaker auction results, particularly in Sydney where clearance rates tracked in the high 60 per cent range, compared with above 70 per cent for Melbourne.
Auction clearance rates in both cities consistently held in the high 70 per cent to low 80 per cent range in March. “Although growth conditions have lost momentum across the largest housing markets, we are yet to see any signs of a material downturn,” said CoreLogic head of research Tim Lawless.
Of the combined capitals, Hobart posted the strongest growth in June with a 2.8 per cent increase in dwelling values on the previous month, followed by Melbourne on 2.7 per cent and Sydney on 2.2 per cent. Darwin, Adelaide and Brisbane went backwards with declines of 2.2 per cent, 1.7 per cent and 0.5 per cent respectively.
Sydney remains the most expensive city with a median dwelling value of $880,000, while Hobart is the most affordable on $355,000.
Over the June quarter, capital city dwelling values increased a modest 0.8 per cent, the slowest quarterly growth rate since December 2015 when the combined index fell 1.4 per cent.
Mr Lawless said the key drivers of the slowdown had 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,” he said.
“Additionally, higher supply levels in the unit market appear to be creating a drag on the performance of the unit sector in specific segments.”
He added that the impact of the prudential regulator’s crackdown on interest-only and investor lending announced at the end of March was 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,” he said.
Mr Lawless warned that rents could rise as a result. “It’s likely that landlords will be seeking to recover some, or all, of their increased financing costs associated with higher interest rates on investment in interest only loans by progressively increasing weekly rents,” he said.
“With record-low wages growth and so much new housing supply coming to market, this remains to be seen.”
Since the end of the GFC in January 2009, capital city dwelling values have increased by 69.8 per cent, largely off the back of a 110.9 per cent increase in Sydney values and a 95.3 per cent increase in Melbourne values.