In November, the Australian housing market experienced a notable slowdown in price gains, signaling a potential cooling off period. According to CoreLogic's national Home Value Index, house prices only rose by 0.6% from October, marking the smallest monthly gain since February when the most recent growth cycle began.
This deceleration in price gains comes after the Reserve Bank of Australia increased the official cash rate for the 13th time in the current cycle. The central bank has also indicated that further rate hikes may be on the horizon if inflation remains stubbornly high.
Despite the slowdown, the national Home Value Index reached an all-time high in November, showing that the market hasn't completely lost its momentum. After a 7.5% decline from its peak in April 2022 to a trough in January, housing values have rebounded by 8.3% over the past 10 months, defying expectations considering rising interest rates, stagnant wages, and increased living costs.
While the overall trend has slowed down, there are noticeable differences in performance across different capital cities. Three cities, Melbourne, Hobart, and Darwin, recorded a decline in housing values in November, according to CoreLogic. Melbourne and Hobart saw a 0.1% decrease, while Darwin experienced a more significant 0.3% drop.
Similarly, Sydney's housing market growth also slowed down significantly, with a mere 0.3% gain in November. This marks the smallest monthly increase during the recovery cycle so far, suggesting that Sydney might follow in Melbourne's footsteps with stabilizing or even decreasing home values in December.
On the other hand, Perth saw accelerated growth in housing values, posting the largest monthly gain since March 2021 at 1.9%. Brisbane and Adelaide also experienced positive growth, with prices climbing by 1.3% and 1.2% respectively.
According to Tim Lawless, research director at CoreLogic, the driving force behind these strong housing market performances in certain cities is the imbalance between supply and demand. Despite external factors impacting the lower eastern seaboard, such as weaker market conditions, the limited supply and high demand in these cities continue to put upward pressure on housing values.
Overall, the Australian housing market is showing signs of cooling off, as price gains have slowed down across major capital cities. However, the resilience of the market, seen in the record high Home Value Index, suggests that it may just be a temporary adjustment rather than a long-term trend.
