Australia’s laggard cities — those that missed Sydney and Melbourne’s two-year housing boom — are finally catching up with most markets staging a recovery during February.
Price growth dipped in a number of cities at the end of last year, but by February, all capitals except Canberra and the hard-hit Perth market saw prices on the rise again, according to researcher CoreLogic RP Data.
However, it is not the prelude to another boom, but nor is it the bust flagged by some commentators in the wake of Labor’s proposal to wind back negative gearing tax concessions and the ongoing debate over a housing bubble.
Melbourne turned in the best performance on a quarterly basis with values rising 3.8 per cent, and for the year, were up 11.1 per cent. Sydney bounced back in February, but fell 0.2 per cent for the quarter. On an annual basis, Sydney’s price growth halved from a peak of 18.4 per cent last July to annual growth of 9.5 per cent.
The Reserve Bank of Australia kept interest rates on hold at 2 per cent yesterday, with analysts speculating policymakers were buoyed by a cooling housing market. “The fact that the rate of capital gains has wound down across the housing market … from the highs of mid last year is likely to be a welcome development for the Reserve Bank,” CoreLogic RP Data head of research Tim Lawless said.
A combination of APRA restrictions on investor lending and higher capital requirements mean that policymakers have scope to cut rates again without fear of stoking another run on housing, the analyst added.
“If the RBA were to provide another cash rate cut later this year, they probably wouldn’t need to worry too much about over stimulating the housing market,” he said. “Mortgage rates are already higher than a year ago … and the pace of investment credit growth is tracking well below the 10 per cent speed limit.”
Prices around the country continue to follow a mixed trajectory. House prices rose 7.6 per cent across the capital cities for the year, but only 2.2 per cent in regional areas. Hobart’s house prices rose 2.9 per cent in February and 8.5 per cent for the quarter, while Brisbane’s values lifted 1.8 per cent for the month, followed by Adelaide up 1.9 per cent and Darwin 0.4 per cent.
Perth’s prices fell 1.1 per cent, and Canberra’s housing prices dropped 0.2 per cent.
On the ground, agents and vendors are preparing themselves for another year of steady buying and selling activity, but without the astronomical capital gains witnessed over the past 18 months.
“They’ve hinted strongly at further cuts and we know that if people perceive they’re in a low interest rate environment, they have confidence to make big decisions,” Melbourne developer Michael Yates told The Australian, from the floor of one of two $3 million penthouses he is selling in Melbourne’s South Yarra.
Abercromby’s agent Jock Langley agreed: “We’re still seeing buying demand outweigh supply, and good interest from offshore taking advantage of the lower dollar. We’re in for a steady year”.
Harry Triguboff’s Meriton Group saw the market pause at the end of last year. “The market came back (from a December dip) and is gearing up now — February has been better than January,” Mr Triguboff said. Meriton predicts to sell more apartments this year than last, and is seeing more Australian buyers on the back of sustained low interest rates.
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Posted by Business Insider on Tuesday, August 18, 2015