In September, Australia's housing market saw slow growth, with home prices rising only slightly and more houses listed for sale, reaching a three-year high. CoreLogic reported a 0.4% price increase, with strong gains in Perth, Adelaide, and Brisbane, while Sydney saw a slight rise and Melbourne had a small decline. Fewer homes were sold at auction, with only 60% sold in major cities, below the decade average. Homes sold privately also stayed on the market longer. Rents rose just 0.1%, and the Reserve Bank of Australia (RBA) is expected to cut interest rates by December if inflation drops.
September witnessed a slow growth in Australia's housing market, with home prices rising only slightly, house listings hitting a three year high, and fewer houses being sold at auctions. This trend is unusual for the housing market in Australia, which is typically busy at this time of the year.
Earlier this month, property consulting firm CoreLogic published figures highlighting the trend in housing prices, with prices increasing from 0.3% in July and August to 0.4% in September. The monthly price increase is attributed to a 1.6% rise in Perth, a 1.3% rise in Adelaide, a 0.9% increase in Brisbane, as well as a 0.2% increase in Sydney, with prices in Melbourne dropping 0.1%.
CoreLogic's Research Director, Tim Lawless, pointed out that there is a gap between the number of houses on sale and buyers in the market in the spring season, with the number of houses on sale reaching a record high since 2021. According to Lawless, the increased supply of houses on sale is a positive for buyers, but for sellers, it increases competition and could compel them to tweak selling conditions.
Data also highlighted that fewer homes are being sold in auctions, with only 60% of the houses being sold in big cities, which is 4% lower than the average rate over the decade. Moreover, homes being sold privately also remain on the market for longer, at an average of 32 days.
For the September quarter, rents increased only 0.1%, with cities like Sydney, Brisbane, and Canberra reporting declines. To the Reserve Bank of Australia, this is a positive development since increased rents are factors in inflation.
The RBA has been slower in cutting interest rates, compared to other central banks and as of now has announced that it will not be reducing interest rates this year. However, with inflation expected to ease in the third quarter, there is a 78% chance that the RBA will cut rates in December.
CoreLogic said that a cut in the interest rates is expected in late 2024 or early 2025, and will amp up the borrowing capacity and encourage households and buyers to make decisions like buying a home. The RBA has already sent out an advisory to consumers from borrowing too much once the interest rates decrease.
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