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July market data reveals what rest of year could hold

By Sasha Karen 03 August 2018 | 1 minute read

Most of Australia’s more popular capital city property markets declined during July while the slightly less popular ones rose. With this in mind, analysis from CoreLogic reveals what to expect for the rest of the year.

Prediction, July market data, property market

During the month of July, dwelling values declined around the country with a national fall of 0.6 of a percentage point, the combined capitals declining by 0.6 of a percentage point and the combined regional markets declining by 0.4 of a percentage point, according to the CoreLogic Hedonic Home Value Index for July.

Melbourne, PerthPerth, TAS Perth, WA, Sydney and Adelaide saw their dwelling values decline by 0.9 of a percentage point, 0.8 of a percentage point, 0.6 of a percentage point, and 0.1 of a percentage point, respectively.

Meanwhile, Darwin, Canberra and Brisbane all recorded rises in dwelling values, going up to 0.4 of a percentage point, 0.2 of a percentage point and 0.1 of a percentage point, respectively. Hobart remained steady.

Despite Darwin’s rise, CoreLogic head of Research Tim Lawless said the declines were due in part to long-term declines recorded in the capital city as well as Perth, combined with an accelerated rate of decline in Sydney and Melbourne.

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It does not look like these declines will be stopping any time this year either, with Mr Lawless claiming the fall in values will continue throughout the rest of the year.

“We can’t see any factors that may halt or reverse the housing markets trajectory of subtle declines over the second half of 2018. The availability of housing credit has been a significant factor contributing to this slowdown, however, there are a variety of hurdles contributing to slower conditions,” Mr Lawless said.

The Hedonic Home Value Index also made note that despite the softening of Sydney and Melbourne markets, Sydney and Melbourne, and to a further extent NSW  and Victoria, show high levels of concentration of investment activity.

Mr Lawless also said even though the 10 per cent limit on investor growth was removed for lenders, he does not expect a rebound in credit availability for investment purposes.

“Mortgage rate premiums for investment loans remain in place and the limits on interest only lending continue to disincentive investors,” he said, adding that certain market factors like low rental yields and low short- to medium-term capital gains also are likely to dampen investment demand.

Although market conditions are pushing out investors, Mr Lawless said consistently low mortgage rates will continue to help support the property market at large, which should keep housing demand from bottoming out.

“Although investors are paying around a 60 basis point premium on their home loans, interest rates remain low for this segment of the market,” he said.

“Higher funding costs could see mortgage rates edge higher, however, we would need to see mortgage rates rise by more than 150 basis points before returning to the 20 year average of 6.8 per cent.

“Considering the 30 per cent limit on interest-only loan originations and the stiff interest rate premiums for interest-only loans, it’s likely we will see owner-occupiers gradually consume a greater share of market activity relative to investors going forward.”

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July market data reveals what rest of year could hold
Prediction, July market data, property market
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