The record-breaking rate of house price declines has finally eased, with values slipping by just 0.7 per cent across the combined capital cities in the December quarter as buyers adjust to higher interest rates.
A sharp recovery in migration last year and expected continued strength this year will also help ease labour shortages and the central bank’s fear of a wages break-out, according to NAB, reducing pressure to raise rates.The increase in Australia’s population – expected to be about 435,000 in 2022 – will also boost demand in pockets of the housing market, primarily in Sydney and Melbourne.
“Buyers have had time to adjust to the new norm of the rising and higher cost of debt, mindful of their reduced borrowing capacity and future-proofing budgets.” Melbourne managed to recoup a sixth of the 4.3 per cent drop it posted in the previous quarter, with prices edging marginally higher by 0.7 per cent.Adelaide, Perth, Hobart also returned to positive growth, with prices rising by 0.2 per cent, 1.1 per cent and 0.6 per cent respectively.“The flow of new supply has been unseasonably weak throughout spring and early summer,” Dr Powell said.
By contrast, Adelaide and Perth were the only capitals hitting record high house prices over the year, with values jumping by 10.2 per cent to $783,705, and by 5.7 per cent to $658,270 respectively. “There is still a risk that the pace of decline could really accelerate again, if the RBA keeps raising interest rates that will risk a recession, and if there’s a pick-up in distressed sales once the majority of fixed term mortgages expire later this year.”
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