Property prices rise (ever so slightly) in 5 capital cities
For the second month in a row home value data suggests the property market's decline may be over.
Last month's CoreLogic home value index showed that prices had stopped falling in Sydney, Melbourne and Hobart. This month, prices rose slightly in all three cities, plus Darwin and Brisbane.
And this time, the nationwide value index showed 0.0% growth over the previous month, meaning that overall property prices have stopped falling.
But Canberra, Adelaide and Perth all recorded small declines in value compared to June.
"Our national dwelling value index may have found a floor in July, with dwelling values holding firm over the month following a consistent trend towards smaller month-on-month declines through the first half of the year," said CoreLogic head of research Tim Lawless.
There are some strong positive factors influencing the housing market at the moment:
- Record low rates. The Reserve Bank of Australia has cut the cash rate twice in June and July, driving mortgage interest rates down. This makes mortgage repayments lower for many borrowers.
- Lower prices. No one should consider property prices to be "low" in cities like Sydney and Melbourne but the rapid, recent decline in prices has certainly helped first home buyers.
- Looser lending guidelines. APRA recently adjusted its guidelines for lenders assessing a borrower's ability to afford repayments. This essentially makes it slightly easier to qualify for a home loan.
- Reduced supply. While recent price drops have made it a buyer's market there are 25% fewer properties for sale now than there were this time last year, restricting supply and driving up demand.
While we only have two months of data to work with, it seems that the fast decline in property prices which started in 2017 (or earlier in Perth and Darwin) and continued throughout 2018, may be stabilising.
Lawless also noted that auction clearance rates were around 70% in Sydney and Melbourne in July, and said that recent CoreLogic data showed "a modest rise in the daily number of mortgaged related valuation events, signaling a lift in housing finance commitments over the most recent two months."
Whether this means flat or limited growth or a return to rapid price rises remains to be seen.