There is now a very clear \u2018two-speed\u2019 property price growth duality splitting time and space\u2026 and mainly money across\u00a0 Australia\u2019s major capital cities, according to Westpac\u2019s senior economist Matthew Hassan.<\/p>\n
On the one hand we have slowing gains for the usual hotshot cities of Sydney and Melbourne \u2013 the Vic capital\u2019s price growth momentum has been all but shirt-fronted of late \u2013 against the accelerating rises in Brisbane, Adelaide and Perth.<\/p>\n
Whereas, those last three cities are all commanding growth at \u2018double-digit\u2019 annualised rates, according to property data firm CoreLogic.<\/p>\n
Their latest home value index, covering the country\u2019s eight major capital cities,\u00a0 rose by 0.6% in April 2024, the same pace as both February and March.<\/p>\n
It was the 15th consecutive monthly gain in home prices, taking the total price growth over that period to 12.2%.<\/p>\n\n
As Hassan says, it wasn\u2019t the country\u2019s headline cities that set the pace, but rather the mid-sized capitals.<\/p>\n
Perth again rose briskly, rising by 2%.<\/p>\n
There are signs growth in Brisbane is moderating, rising by 0.9% in April, the slowest pace in 12 months.<\/p>\n
Adelaide rose by 1.3%.<\/p>\n
Smaller capital cities including Hobart (+0.3%), Darwin (+0.6%) and Canberra (+0.2%) recorded small gains.<\/p>\n
Overall, the April update is again a bit unclear on whether price momentum is showing a slight lift or fading, says Hassan.<\/p>\n
\u201cWhat is clear however is the diverging performance across markets with conditions softening in Sydney and Melbourne but upturns still powering ahead in Brisbane, Adelaide and Perth.<\/p>\n
\u201cThere is a similar \u2018two-speed\u2019 picture on turnover, sales in Sydney and Melbourne down 9.8%qtr over the 3mths to April but up 1.5%qtr across the other major capitals on a combined basis.<\/p>\n
\u201cThe detail also continues to show a contrasting performance across tiers, top tier sub-markets weaker than others in Sydney and Melbourne but out-performing in Adelaide and Perth.\u201d<\/p>\n
Sydney prices rose by 0.4%, a small lift on the 0.3% gain in March and the flat outcomes recorded between November and January.<\/p>\n
However, as CBA\u2019s Belinda Allen argues, the gains in Sydney are strongest outside of the top quartile of property values.<\/p>\n
So Sydney\u2019s cheaper parts are still bustling, unlike Melbourne, which remains desperately short of rugby league.<\/p>\n
\u201cMelbourne continues to record weaker outcomes, falling by 0.1% in April with prices lower over the past six months. Changes to land tax in Victoria could be providing a headwind.\u201d<\/p>\n
Within the second group, the pace of price rises has moderated in Brisbane (+0.9%mth, +16.1%yr) but lifted a little in Adelaide (+1.3%mth, +14.0%yr) and remains very strong in Perth (+2.0%mth, +21.1%yr).<\/p>\n
Annual price growth is tracking slightly behind the national pace in Sydney (+0.4%mth, +8.7%yr) and is materially slower in Melbourne (\u20130.1%mth, 2.8%yr).<\/p>\n
Across the smaller capitals: Hobart recorded a 0.3% rise in the month but with prices still down slightly over the year (\u20130.4%yr); Canberra prices rose 0.2% to be up 2.1%yr; and Darwin recorded a slightly firmer 0.6% gain to be up 1.9%yr. Across regional areas, prices were flat in regional Vic, up 0.6% in regional NSW and posted a stronger 1.1% gain in regional Queensland (which includes the Gold and Sunshine Coasts).
\n\u00a0<\/p>\n
Shane\u00a0Oliver, c<\/span>hief economist & head of investment strategy AMP, says it\u2019s pretty clear exactly where the national property market is.<\/p>\n \u201cCaught between high rates and the extreme housing shortage, with the latter dominating.\u201d<\/p>\n He says the big negative influence on the property market remains x2 problems \u2013 poor affordability and high mortgage stress.<\/p>\n \u201cFor decades property prices were supported by ever lower interest rates but due to the rebound in interest rates from May 2022 and high home price to income ratios there is now a wide divergence between buyers\u2019 capacity to pay for a property and current home prices \u2013 with the capacity to pay down by nearly 30% on our estimates over the last two years.\u201d<\/p>\n\n In the absence of rapid interest rate cuts this continues to point to a high risk of lower property prices ahead, Shane says.<\/p>\n \u201cThis is reinforced by ultra-low sentiment towards property. A sharp rise in unemployment in response to weak spending in the economy would add to the downside risks flowing to property prices from high rates.\u201d<\/p>\n Against this though is the chronic housing shortage which got the upper hand over the last year as immigration levels surged.<\/p>\n \u201cPut simply the surge in population growth to a record 660,000 over the year to the September quarter last year driven by record immigration levels meant that around an extra 250,000 new homes needed to be built.<\/p>\n \u201cBut instead completions have been running around 170,000 as the home building industry struggled to keep up with rising costs and material & labour shortages and as approvals to build new homes fell.<\/p>\n\n \u00a0<\/p>\n According to Shane, the shortfall of homes has just expanded by another 70,000 or so dwellings and is expected to see the accumulated shortfall rise to around 200,000 dwellings by June this year.<\/p>\n \u201cWhich is itself a conservative estimate,\u201d he assures.<\/p>\n While prices nationally pushed above their 2022 peaks late last year and are now 3% higher, prices are still 6.2% below these levels in real, inflation adjusted terms.<\/p>\n \u00a0<\/p>\n There continues to be a notable divergence between monthly trends reported in the headline, non seasonally adjusted, measure and CoreLogic\u2019s seasonally adjusted estimates, says Hassan.<\/p>\n \u201cOrdinarily there is little different but currently the seasonally adjusted measures suggest momentum is continuing a gradual fade that began in mid-2023 rather than lifting slightly.<\/p>\n \u201cThese doubts should clear as we move into the second half of the year and seasonal price effects turn slightly negative. In the meantime, annual growth rates provide a \u2018sense-check\u2019 that is unaffected by these issues.\u201d<\/p>\n\n Via Westpac<\/p>\n There continues to be a notable divergence between monthly trends reported in the headline, non-seasonally adjusted, measure and CoreLogic\u2019s seasonally adjusted estimates.<\/p>\n Ordinarily there is little different but currently the seasonally adjusted measures suggest momentum is continuing a gradual fade that began in mid-2023 rather than lifting slightly.<\/p>\n These doubts should clear as we move into the second half of the year and seasonal price effects turn slightly negative. In the meantime, annual growth rates provide a \u2018sense-check\u2019 that is unaffected by these issues.<\/p>\n \u00a0<\/p>\n The pace of gains across the first four months of the year has been a little stronger than CBA anticipated.<\/p>\n Strong demand despite lower borrowing capacity and rising affordability challenges, as well as continued supply constraints has continued to push momentum in the housing market, says senior economist Belinda Allen.<\/p>\n \u201cTalks of interest rate cuts earlier in the year could also have provided a boost.\u201d<\/p>\n And now that chatter is flipping ahead of the US Federal Reserve\u2019s looming rates call.<\/p>\n \u201cDue to stronger than expected non\u2011discretionary inflation, we have now pushed back the start of the RBA easing cycle,\u201d says CBA lead economist Gareth Aird.<\/p>\n \u201cWe now expect the first rate cut in November, compared to September and only one rate cut this year, rather than three,\u201d says Belinda.<\/p>\n \u201cA shallower easing cycle this year could see less upward impact on home prices late 2024, reducing, but not eliminating the risk of home prices this year exceeding our 5% forecast.\u201d<\/p>\n Via CBA<\/p>\n What\u2019s pretty clear is that the leading indicators of Aussie home prices right now are mixed.<\/p>\n Auction clearance rates are still above where they were in late 2023, says Belinda, while lending and sentiment remain a tailwind.<\/p>\n She says the reprieve from strong home price growth will have to come from the supply side.<\/p>\n \u201cA lift in listings, as well as new housing supply will help, but as we have seen new building approvals are constrained due to challenges in the construction space and crowding out from government and other forms of private investment.\u201d<\/p>\n <\/span><\/p>\n The post Westpac: It\u2019s a two-speed house market! AMP: It\u2019s simpler. There\u2019s more Australians than homes<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"Searching for true north on price growth<\/h2>\n
What lies ahead then, Belinda?<\/h2>\n