Housing market activity in June highest mark for month in more than a decade, research finds
By Alex Chapman and SSB
Plenty has been said about the turbulent housing market - but could the needle finally be swinging in buyers’ favour?
The turbulent housing market is showing no signs of slowing down.
But a new figure could mean the needle is swinging in buyers’ favour.
Market analyst REA Group this week released its monthly PropTrack Listings Report.
It found that market activity in June was the busiest it had been in the winter month for more than a decade.
New listings on realestate.com.au were up 8.5 per cent, the report found, marking it the busiest June since 2011.
Economist and report author Angus Moore said it was a busy start to a usually quiet winter period.
“The property market has had a strong first half of 2022.
“There has been a brisk pace of new listings, with more new listings nationally across the first half of the year than during any year since 2015.
“While conditions are likely to slow a little as we continue through the typically quieter winter period, activity has remained robust in many markets.
“Though selling conditions broadly have begun to temper after a very strong spring 2021 and early 2022, fundamental drivers of demand remain strong, with unemployment low, wages growth expected to pick up over this year, and international migration now returning.”
So, what does it mean for new buyers?
Ultimately, Moore said, it means they had more choice than usual.
“Buyers have had more properties to choose from in recent months,” he said.
“The wave of new supply coming to market over the first half of the year, particularly in Sydney, Melbourne, and Canberra, has lifted the stock available on market and eased how competitive conditions had been.
“Finally, after growth hit multi-decade highs in 2021, home prices are falling in many cities.”
Further placing downwards pressure on the housing market, he said, was the Reserve Bank of Australia’s back-to-back-to-back interest rate rises.
The RBA in May lifted the cash rate from the record-low 0.1 per cent by 25 basis points, before recurrent 0.5 per cent rises.
That left the cash rate settled at 1.35 per cent in July.
Economists forecast there will be at least another three rate rises before the year is out.
Australia’s largest lender, the Commonwealth Bank, predicts another 0.75 increase this year in the form of three 25 basis point hikes.
“The Reserve Bank isn’t done yet in terms of lifting interest rates,” CommSec chief economist Craig James said.
“We can expect further interest rate hikes in coming months. This is the most aggressive the Reserve Bank has ever been - we’ve had three interest rate hikes in a row and the last two were 50 basis points.
“Our expectation is that, in August, we’ll probably get an interest rate increase, probably about a quarter of a per cent, another quarter of one per cent in September and also in November.”
Australia’s housing downturn gained momentum in June, driven by declines in Sydney and Melbourne and weakening elsewhere.
The CoreLogic Home Value Index showed a second consecutive month of value declines in June, down 0.6 per cent to be 0.2 per cent lower over the June quarter.
“Housing value growth has been easing since moving through a peak in March last year, when early drivers of the slowdown included rising fixed term mortgage rates, an expiry of fiscal support, a trend towards lower consumer sentiment, affordability challenges and tighter credit conditions,” CoreLogic research director Tim Lawless said.
“More recently, surging inflation and a rapidly rising cash rate have added further momentum to the downwards trend. Since the initial cash rate hike on May 5, most housing markets around the country have seen a sharper reduction in the rate of growth.
“Considering inflation is likely to remain stubbornly high for some time, and interest rates are expected to rise substantially in response, it’s likely the rate of decline in housing values will continue to gather steam and become more widespread.”
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