House Prices Under Labor
Predicted market falls are coming – though some experts claim things have been over-egged.
2 min
Economists are predicting the national property market will continue to soften despite Labor Government initiatives aimed at stimulation and a targeted ease of entry.
Labor’s recently announced ‘Help to Buy’ scheme – a new program targeting first home buyers, single parents and low-income earners in a bid to get them into the market sooner – was a key announcement from the incoming Albanese government and aligned to a confirmed continuation of the Coalition’s ‘Home Guarantee Scheme.’
“With affordability worsening due to the first interest rate rise in 11 years, the government incentives and offsets will aid housing in the short term,” says Dr Wilson, chief economist at My Housing Market.
“Of course, interest rates will play a large role in how the market behaves, and while they are certainly on the way up, how far up they go is still up in the air.”
Others point to future pain – with predictions of substantial drops in property prices.
AMP claims Australians should expect a 10% – 15% drop in house prices across the next 18 months.
By comparison, Westpac remains firm with an earlier forecast of a national price fall of 2% by the end of 2022 and a further 8% in 2023. The CBA, meanwhile, predicts national prices to flatline by the end of the year, also with an 8% drop in 2023.
Dr Wilson remains sceptical of such dramatic reductions.
“The historical data doesn’t suggest that rising interest rates impact the market at that level,” he says. “There’s no doubt that over the past six months there’s been flat, or negative price growth. But the housing market is still undersupplied and with building costs rising and a lack of building in the pipeline, along with migration set to return at full capacity soon, there will still be more people than houses.
“One only has to look at the rental market, especially in major cities like Sydney and Melbourne to see that there is still a high demand for housing.”
Not discounting the effect of interest rates on the economy, Dr Wilson explains states the key to the national housing market lies with long-term inflation and wage-growth.
“For the new government, and the RBA, the problem lies in wages, and making sure that it keeps pace with inflation. With inflation going up, housing becomes less affordable, and that will have a greater impact on prices than interest rates.
“But at the end of the day, prices will stay fairly flat, if not a little bit under the line, and will be for some time.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
Capital cities lead the way as median home values see clear upswing
2 min
Home values continue their upwards trajectory, recording the strongest monthly growth in 18 months, CoreLogic data shows.
The property data provider reports that their Home Value Index has noted a third consecutive rise in values in May, accelerating 1.2 percent over the past month. This is on the back of a 0.6 percent increase in March and 0.5 percent rise in April.
Sydney recorded the strongest results, up 1.8 percent, the highest recorded in the city since September 2021. The fall in Sydney’s home values bottomed in January but have since accelerated sharply by 4.8 percent, adding $48,390 to the median dwelling value.
Melbourne recorded more modest gains, with home values increasing by 0.9 percent, bringing the total rise this quarter to 1.6 percent. It was the smaller capitals of Brisbane (up 1.4 percent) and Perth (up 1.3 percent) that reported stronger gains.
CoreLogic research director Tim Lawless said the lack of housing stock was an obvious influence on the growing values.
“Advertised listings trended lower through May with roughly 1,800 fewer capital city homes advertised for sale relative to the end of April. Inventory levels are -15.3 percent lower than they were at the same time last year and -24.4 percent below the previous five-year average for this time of year,” he said.
“With such a short supply of available housing stock, buyers are becoming more competitive and there’s an element of FOMO creeping into the market.
“Amid increased competition, auction clearance rates have trended higher, holding at 70 percent or above over the past three weeks. For private treaty sales, homes are selling faster and with less vendor discounting.”
Vendor discounting has been a feature in some parts of the country, particularly prestige regional areas that saw rapid price rises during the pandemic – and subsequent falls as people returned to the workplace in major centres.
The CoreLogic Home Value Index reports while prices appear to have found the floor in regional areas, the pace of recovery has been slower.
“Although regional home values are trending higher, the rate of gain hasn’t kept pace with the capitals. Over the past three months, growth in the combined capitals index was more than triple the pace of growth seen across the combined regionals at 2.8% and 0.8% respectively,” Mr Lawless said.
“Although advertised housing supply remains tight across regional Australia, demand from net overseas migration is less substantial. ABS data points to around 15% of Australia’s net overseas migration being centred in the regions each year. Additionally, a slowdown in internal migration rates across the regions has helped to ease the demand side pressures on housing.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
