Australia home price growth slows in July, says CoreLogic
Low mortgage rates keeps demand still at a high in cities like Sydney and Melbourne
Home prices across Australia’s major cities rose for a seventh straight month in June as record-low mortgage rates kept demand hot in Sydney and Melbourne, though annual growth in prices slowed across the country.
Monday’s figures from property consultant CoreLogic showed its index of home prices for the combined capital cities rose 0.8 per cent in July, from June when it increased by 0.5 per cent in June.
Yet annual growth in prices slowed to 6.1 per cent, from 8.3 per cent in June and a long way from last year’s peak of above 11 per cent.
The Reserve Bank of Australia (RBA) has long been concerned about an overheating housing market, but that did not stop it cutting interest rates to 1.75 per cent in May and speculation is strong it will ease further.
The RBA has taken comfort from most of the price pressure being concentrated in Sydney and Melbourne, with the rest of the nation far more muted.
Values in Sydney climbed 1.3 per cent in July to be 9.1 per cent higher for the year, while Melbourne enjoyed gains of 1.1 per cent and 7.5 per cent. The median home price in Sydney is A$775,000 (US$588,000), far above the national level of A$570,000.
In contrast, prices fell in Brisbane, Darwin, Canberra and Perth in July. Home values outside the cities grew a bare 1.4 per cent in the year to July.
“The recent moderation in the rate of capital gains should be viewed as a positive sign that growth in dwelling values may be returning to more sustainable levels,” said CoreLogic’s Asia-Pacific research director Tim Lawless.
He also noted that rents had fallen in July to be down 0.6 per cent for the year.
Capital city rental yields slowed to an new historic low of 3.3 per cent with Melbourne now recording the lowest gross yield for houses at 2.8 per cent, while Sydney averaged 3.9 per cent for apartments.
The marked slowdown in rents has been a major factor behind a nationwide decline in consumer price inflation, which hit a 17-year low in the second quarter.
That in turn added to pressure for another cut in rates from the RBA, even as policy makers fretted that a build up of borrowing, particularly for buy-to-let properties, could leave banks and households vulnerable should prices ever turn down.
A survey from ME Bank showed that, of the 65 per cent of households with outstanding debt, 10 per cent feared they would not be able to meet minimum repayments in the next six to 12 months, the highest since the survey began in late 2011.