Sign house prices will fall 20 percent

Homes in Australia’s capital cities continue to decline in value during the country’s widespread economic crisis.

House prices in Australia’s capital cities have been overtaken by the country’s widespread economic crisis, with values ​​continuing to fall.

CoreLogic’s Home Value Index, a tool that measures movements in the capital’s housing markets, registered its first national decline since September 2020 in May.

In the last quarter, the value of houses in Melbourne and Sydney fell by 1.8 and 2.8 percent respectively.

While increases were recorded in Adelaide (5.2 percent), Brisbane (2.7 percent) and Perth (2.1 percent), these increases were not enough to offset the declines in Melbourne and Sydney.

This meant that the house value in those five cities fell by 0.9 percent in the last quarter.

CoreLogic cited a combination of higher interest rates, rising inventory levels and lower sentiment for these “muted conditions.”

“There has been much speculation about the impact of rising interest rates on the real estate market, and last month’s hike in spot interest rates is just one factor causing home price growth to slow or reverse,” said CoreLogic research director Tim Lawless. .

“It’s important to remember that housing market conditions have deteriorated over the past year, at least on a macro level.”

Mr Lawless said that after quarterly growth in national home values ​​peaked in May last year, homes had become less affordable.

“Since then, housing has become more unaffordable, households have become increasingly sensitive to higher interest rates as debt has risen, savings have declined and credit conditions have tightened,” he said.

“Now we are also seeing high inflation and higher debt levels flowing into less demand for housing.”

Chief AMP economist Shane Oliver fears housing values ​​in the capital will continue to fall.

“The housing shortage is accelerating. Poor affordability, rising rates and low confidence point to further sharp declines ahead,” he said.

“From top to bottom, it’s now more likely to be 15 to 20 percent.”

CoreLogic’s monthly housing chart for June also noted that these factors “may continue to put further pressure on the home value index.”

InvestorKit head of research Arjun Paliwal said he expected a three-speed market to last for the rest of the year.

“The first speed, towards Sydney and Melbourne, will decrease further. People there are more sensitive to changes in supply and demand that happen with sentiment and interest rates,” he said.

“As for second rate, our smaller capitals and massively under-stocked regional cities… those regions will continue to grow.”

The final rate Mr Paliwal identified involved units and townhouses, which he expected would still perform poorly despite costing less than buying a house.

“A lot of people have this theory that because the price difference between units and houses is so big, everyone will jump. I don’t feel that will be the case, I still expect many unit markets to perform quite poorly in 2022,” he said

“The taste that has been left in many people’s mouths after Covid and the change in lifestyle preferences for space, this behavior is not immediately changing because price differences are better.”

On what sellers in Melbourne and Sydney should do, Mr Paliwal said it was not in their favor to stretch their processes.

“By adapting to the advice of sales agents and the right pricing from day one, you can move forward and gather momentum,” he said.

“Expecting things to get better in time in these two cities isn’t the best advice when it comes to current sellers.”

But he said there was a “huge opportunity” for investors if homeowners were shocked by the national home value index, which declined overall despite rising prices in several capital cities.

“If you see our two big cities causing some changes in the national data, it could lead a lot of people in those smaller cities to think that things might not be so rosy, even though their foundations are jam-packed with solid bits of growth,” he said. Paliwal.

“As a result, you may see a buying window for savvy investors to pick up real estate in strong markets across Australia, just because of a little uncertainty from the general public.”

Outside of Melbourne and Sydney, Canberra’s home values ​​also fell 0.1 percent in May, the first monthly decline since July 2019.

The country’s capital is Australia’s second most expensive real estate market, after Sydney.

#Sign #house #prices #fall #percent

Leave a Comment

Your email address will not be published. Required fields are marked *