Property prices in Sydney and Melbourne record the first faint rises since 2017
National dwelling values fell 0.2% but the figures suggest the worst of the property downturn is over.
For the first time since 2017 property prices in Australia's two largest cities have actually gone up rather than down, albeit by very small amounts. Prices in Sydney rose 0.1% and prices in Melbourne rose 0.2%.
According to the June 2019 figures from CoreLogic's Hedonic Home Value Index, these are the first increases in values in these cities since prices began to fall from their 2017 peaks (Sydney peaked in July 2017 and Melbourne peaked in November 2017).
Overall prices fell in all other capital cities except Hobart (up 0.2%). Nationally, prices fell 0.2% but this is the smallest monthly price decline in over a year, which further suggests that the market slump may actually be slowing.
Australia's combined regional property markets fell 0.4% overall. Here's a snapshot of the CoreLogic figures.
Source: CoreLogic Hedonic Home Value Index June 2019
Price falls were already slowing in May's Home Value Index data and since then the Reserve Bank has lowered the cash rate. This sent variable home loan rates falling, making borrowing more affordable. The federal election result seems to have given investors more confidence (at least, according to real estate agents).
But CoreLogic head of research Tim Lawless said, "The pace of falling home values [in Sydney and Melbourne] has been consistently reducing over the year to date. Importantly, the improving conditions through mid-May were largely 'organic', pre-dating the positive boost in sentiment following the federal election and interest rate cuts in early June."
Lawless added that these policy developments "should provide a further positive flow through to housing market demand".
For now, property prices remain lower than they have been in quite a while. But after years of strong growth, these prices are still very expensive relative to people's incomes. And if prices start to recover, even slowly, affordability won't improve any further. Interest rates seem likely to fall even lower, which will make borrowing a large amount of money a little cheaper. Although this may have the effect of boosting price growth further.