House prices appear to have surged back after a brief seasonal dip, contradicting claims of a cooling market.
As The New Daily has reported, April and May are generally weaker months for the popular CoreLogic monthly home value index.
The new June figures, released on Monday, estimated that house prices rose by a huge 1.8 per cent over the month in the combined capital cities – the strongest month-on-month increase since July 2015.
June prices grew the most in Hobart (+2.8pc), Melbourne (+2.7pc), Canberra (+2.6pc) and Sydney (+2.2pc).
They were weakest in Darwin (-2.2pc), Adelaide (-1.7pc), Brisbane (-0.5pc) and Perth (+1.4pc).
Treasurer Scott Morrison claimed the result as a win for the government. He said Treasury and APRA, working in tandem, had achieved a “safe landing” for house prices, as opposed to the “hard landing that Labor’s policies would deliver”.
Mr Morrison chose to quote the June quarter numbers, which had combined capital-city price growth of only 0.8 per cent – the weakest quarterly result since December 2015.
“I think what we are seeing in the data on housing is an endorsement of the careful approach the government has been taking,” he told reporters on Monday.
“Taking the more careful, measured and sober approach to this, using the flexible policies that we have available to us through the regulator, I think is providing that very calm and considered way to deal with what is a very real issue for so many Australians.”
The Treasurer was referring to APRA’s tightening of mortgage lending standards in March. He can claim government involvement in this decision because Treasury has two seats on the eight-member Council of Financial Regulators, along with representatives for APRA, ASIC and the Reserve Bank.
What Mr Morrison ignored at the press conference was that the quarterly result was driven by large month-on-month falls in April and May, when CoreLogic’s price index traditionally softens as it rebalances from strong first quarters – and because of the cold weather.
The only exception was last year, when the market bucked the trend and continued to boom.
CoreLogic director of research Tim Lawless confirmed this to The New Daily back in April.
“Potentially there is some seasonality creeping into these numbers and that’s one of the reasons why I would probably suggest caution calling the peak right now before we see a few more months and see if the trend actually develops,” Mr Lawless said at the time.
“When we look at, say, a year ago or any sort of seasonality in the marketplace, yeah, we do generally see some easing in our reading around April and May.”
CoreLogic’s June numbers aren’t the only contradiction of the Treasurer’s “safe landing” narrative.
On Friday, APRA published its latest banking statistics for the month of May, which showed mortgage growth was strengthening.
Between April and May, banks increased the value of home loans to owner-occupiers by 0.7 per cent and to property investors by 0.42 per cent.
This was up from the previous month. Between March and April, banks had increased the value of owner-occupier loans by 0.6 per cent, and property-investor loans by 0.4 per cent.