Has housing price growth plateaued?

A report has highlighted the easing in national home values over the last month that could suggest that Australia’s hot property market is entering a cooldown period.

According to CoreLogic’s economist Kaytlin Ezzy, CoreLogic’s Daily Home Value Index has seen “a marked easing” in the rolling four-week change, with national values rising only 0.5 per cent in the four weeks to 18 July, down from 0.7 per cent seen the same time last month.

“The winter chills are driving temperatures lower across the country, but the thermometer is not the only thing that has been dropping,” Ezzy said.

“While sales and listing activity typically show a seasonal easing through winter, the trend in housing values hasn’t historically displayed seasonal behaviour.

“Instead, the recent easing in growth has likely been linked to persistently low consumer sentiment amid stubbornly high inflation and a rise in advertised stock levels in some markets.”

Housing values have been supported by low listing levels along with the expectation of reductions in the official cash rate later this year, according to CoreLogic, but, as the last few data prints on the Consumer Price Index (CPI) have come back hotter than anticipated, rate cuts have been pushed back, leaving consumer “resigned to the fact that interest rates could remain higher for longer”.

As a result, potential buyers are likely holding off and delaying purchasing decisions until interest rate outlooks become clearer, thus reducing demand, and taking “some heat out of the market”, according to Ezzy.

CoreLogic found that the 28-day change in capital city house values eased to 0.4 per cent from 0.7 per cent during the same time in the previous month, although unit growth has remained consistent at approximately 0.7 per cent.

Sydney in particular, has seen dwelling values substantially ease compared to some of the more affordable capitals, with the 28-day change easing to 0.3 per cent from 0.7 per cent.

“Affordability continues to be an important determiner for the pace of growth, with the more affordable end of the market showing more resilience to the elevated interest rate environment,” Ezzy said.

“Markets with lower price points are likely to be seeing a deflection of demand from the middle-to-higher end of the market as borrowing capacity reduces and affordability pressures bite.”

Despite signs that the RBA will embrace a “lower-for-longer” strategy and further impede on housing demand, it is still likely that values will continue to increase although at a slower pace and with “significant diversity from city to city and region to region”.

[RELATED: RBA tipped to embrace ‘lower for longer’ strategy]

Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.