Market Update: Australian Home Prices Continue to Rise in August, but Growth Rate Slows
In the latest data released by property consultant CoreLogic, Australian home prices saw their 19th consecutive monthly increase in August. Despite this positive trend, the pace of growth showed signs of slowing, with national home prices rising by 0.5% in August, slightly higher than the previous month's 0.3% increase.
Year-over-year, home prices are up by 7.1%, but the quarterly increase of 1.3% is now less than half of what it was a year ago. CoreLogic's Head of Research, Eliza Owen, attributed this slowdown to affordability constraints, noting that while there is still more demand than supply in the market, it is becoming increasingly balanced.
Across different cities, price increases varied, with Perth seeing a 2.0% rise, followed by Adelaide at 1.4% and Brisbane at 1.1%. Sydney experienced a modest 0.3% increase, while prices decreased in Canberra, Melbourne, Darwin, and Hobart.
A recent Multibagger poll of property analysts predicted that average home prices in Australia will rise by more than 6% this year, before moderating slightly in the coming years. Despite the Reserve Bank of Australia's efforts to raise interest rates by 425 basis points since May 2022 to control inflation, the real estate market has continued to perform well, fueled by record immigration and limited housing supply.
Looking ahead, market expectations suggest a 78% probability of interest rate easing by the end of the year. This news could have significant implications for the housing market and overall economy, as lower interest rates may further stimulate demand for homes and impact prices.
In summary, while Australian home prices have continued to rise, the pace of growth has started to slow down. Affordability constraints and potential interest rate adjustments are key factors to watch, as they could influence market dynamics and impact individuals' financial decisions. Stay tuned for more updates on this evolving situation.