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Matthew Hassan, analyst at Westpac, points out that the correction in Australian dwelling prices has ended as the CoreLogic home value index, covering the eight major capital cities, rose 0.1% in July following a 0.1% dip in June.

Key Quotes

“The flattening follows a 10.7% decline over the previous 21 mths. Prices are still down 7.3%yr but the annualised pace over the last three months has slowed to just -1.7%.”

“While the stabilisation coincides with RBA rate cuts in June and July, the price performance has been improving steadily in 2019. Other factors have been at play including reduced drags from changes in loan serviceability assessments and uncertainty around housing-related tax policy.”

“Overall, while there are still pockets of price weakness, most markets are a clear stabilisation. Auction activity suggest the gains in Sydney and Melbourne will continue near term. Housing-related sentiment has also posted a strong rally. The main caveat is still around extremely low levels of turnover. Prices will face a key test as turnover lifts heading into the Spring selling season.”

“Westpac continues to expect prices to remain over the rest of 2019 with the recovery in investor demand likely to be only tentative. Any strong lift in prices is likely to be capped as affordability constraints re-emerge.”