The slump in home sales activity has abated as the appeal of historically low mortgage rates increasingly shifts market sentiment, according to CoreLogic.
Reflecting on recent trends in the national housing market, CoreLogic’s head of research, Tim Lawless, has noted the shift in sales activity off the back of recent political and economic developments.
According to CoreLogic, there were 367,630 settled sales over the 12 months ending August 2019 – 17 per cent lower year-on-year, and approximately 30 per cent below the peak level of annual sales recorded over the 12 months ending September 2015.
However, Mr Lawless observed that in recent months, home sales have appeared to stabilise, with the six-month trend reporting a floor at around the same lows recorded during the last two downturns in 2008 and 2010-12.
CoreLogic’s latest property market update revealed that nearly 2,000 homes were taken to auction in the week ending 22 September, up 21 per cent, while auction clearance rates remained elevated at above 70 per cent.
Mr Lawless stated that the rise in home sales activity has coincided with an improvement in residential property prices.
“The six-month trend has been tracking higher since June 2019, in line with a recovery in home values,” Mr Lawless said.
According to the latest data from CoreLogic, national home values increased by 0.8 per cent in August – the first monthly rise since April 2017.
Mr Lawless attributed the shift in sentiment and the improvement in sales activity to a number of recent political and economic developments, making particular reference to the fall in mortgage rates, which have hit their “lowest level since the 1950s”.
“A boost to confidence following the federal election, which removed a lot of the uncertainty around housing tax reform,” he said.
“Also, lower mortgage rates and policy changes from APRA, which relaxed home loan servicing tests for borrowers, were other likely factors driving the rebound in activity.”
Demand for housing is expected to pick up further in the coming months, with the mortgage rates expected to fall further.
Analysts are expecting at least one additional cut to the cash rate from the Reserve Bank of Australia (RBA) before the close of 2019.
According to AMP Capital chief economist Shane Oliver, the central bank may lower rates twice in the coming months, taking the cash rate to a new record low of 0.5 per cent.
The RBA’s next monetary policy board meeting will be held on Tuesday, 1 October.