House prices: CoreLogic says ‘higher barriers’ for first-time buyers slow property price surge


Australian property prices have had their fastest annual growth rate in 32 years, and while the monthly pace has slowed, a new peak could be coming.

Australian house prices remain red hot but the foot has slipped off the accelerator as first-time homebuyers find themselves priced out.

Fresh data from property analytics firm CoreLogic shows the monthly growth rate for Australian property prices stalled again in September as new homebuyers struggled to get a deposit together to match inflated values.

The value of Australian housing increased by another 1.5 per cent last month, taking the annual growth rate to a 32-year high of 20.3 per cent amid rock-bottom interest rates, government tax incentives and a Covid-driven lull in advertised stock.

But September was, nonetheless, the slowest price growth in eight months.

“It is becoming increasingly clear the housing market moved past its peak rate of growth in March when nationally dwelling values increased by 2.8 per cent,” CoreLogic research director Tim Lawless said.

CoreLogic said the easing growth rate could be attributed to first-time buyers finding it hard to get into the market.

“With housing values rising substantially faster than household incomes, raising a deposit has become more challenging for most cohorts of the market,” Mr Lawless said.

The median national house price is now $674,848, with Sydney’s median an eye-watering $1.06m, Melbourne $775,142 and Canberra $838,904.

Mr Lawless noted that in order to raise a 20 per cent deposit, the typical Sydney house buyer would need around $262,300.

“Raising a deposit and funding transactional costs has become a significant challenge … especially first home buyers who have not had the benefit of home ownership as a source of wealth,” he said.

Mr Lawless said existing homeowners looking to upgrade, downsize or move home may be less affected as they had the benefit of equity accrued as housing values surged.

And although the monthly rise in house prices has slowed, CommSec chief economist Craig James said the annual growth rate was not expected to peak until February at about 25 per cent.

“Housing is all about demand and supply, and up to now demand has been super strong, underpinned by low interest rates, government grants and good job security,” Mr James said.

“Supply has been soft due to Covid-wary vendors.

“But as noted by CoreLogic, supply could lift in November and December as lockdowns end.

“Also a near record number of homes are being built. And weaker housing affordability must restrain demand at some point.”

The surge in house prices has not been without concern, with Federal Treasurer Josh Frydenberg this week flagging measures to help cool down the market, giving financial regulators the go ahead to consider clamping down on high-debt home loans.

In the June quarter, the number of new residential mortgages where debt was at least six times greater than income jumped to 21.9 per cent, up from 16 per cent in the same quarter last year.

Ultimately, Mr Lawless said the potential headwinds to house price appreciation were being offset by super-accommodative interest rates that were expected to remain for several years to come.

“Market momentum remains strong, with monthly growth in housing values nearly four times the decade average … while indicators suggest it is still very much a ‘seller’s’ market,” he said.

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