There are further signs Australia’s worst housing downturn in modern history may be drawing to an end, with CoreLogic’s monthly index showing further modest price rises in July.
The company’s hedonic home value index showed a 0.1 per cent rise across the combined capital cities last month but nationally, including regional markets, prices were flat.
CoreLogic’s head of research Tim Lawless said, nationally, housing prices “may have found a floor in July” and it was the big east coast markets that were generally posting gains.
“We’re not really seeing signs of a recovery just yet, but absolutely we are seeing housing prices stabilising,” he said.
“We did see values rise last month in Sydney and Melbourne, in July we’ve actually seen that become a little more widespread – Sydney values are up 0.2 per cent, as are Melbourne values and Brisbane values, and also in Hobart and Darwin we’ve seen a subtle rise in values.
“Whereas we’re still seeing values drifting a little bit lower in Adelaide and in Perth, and [they] also dropped a little bit in Canberra.”
‘Stimulus for the market’
Mr Lawless said a range of factors had halted Sydney and Melbourne’s steep slide in prices, which was the worst property downturn those cities had experienced in decades.
One of those was the federal election outcome, which scuppered Labor’s proposed changes to negative gearing and the capital gains tax discount.
“We’ve seen a lot of that uncertainty around taxation reform taken off the table, which is starting to see investors pricking their ears up once again,” Mr Lawless said.
Westpac’s consumer sentiment survey has shown a significant rebound in both the “time to buy a property” and “house price expectations” indices.
Mr Lawless said interest rate cuts in the past two months had also boosted demand, along with looser lending restrictions from the bank regulator.
“We are seeing lower mortgage rates, which is providing some stimulus for the market,” he said.
“Mortgage rates haven’t been this low since the 1950s, so you can see why borrowers are taking advantage of those very low interest rates.
“They’re also taking advantage of the fact that it’s become a little bit easier to get a loan in the sense that APRA’s revised serviceability assessments are a little bit lower over the past couple of months.”
‘Recovery won’t be rapid’, expert warns
Mr Lawless said he thought the stabilisation would turn into a recovery in prices, “though it will be quite mild”.
“We probably will see values … edging a little bit higher across most markets, but I don’t think this recovery phase is going to be a rapid one,” he said.
“There are still some fairly stiff headwinds around the credit space … we are still seeing lenders [being] very conservative, focusing a lot more on individual expenses.
“If we do start to see an acceleration in housing price growth, particularly from an investment perspective, we probably will see some additional policy levers being pulled in an aim to keep housing markets relatively stable and trying to minimise the upwards trajectory of household debt.”