House prices in Australia continue to show steady growth and momentum remains strong for now.

The latest data from CoreLogic showed home values ​​rose 1.5% in October, marking the third straight month of comparable growth.

Brisbane was the star of the capital cities last month, with house prices rising 2.54%. While Canberra, Hobart and Adelaide all saw growth of around 2.0% for the month.

Perth was the only capital with a negative result in October, with values ​​falling -0.11%.

Year-on-year, house prices across Australia are up 21.58%, while capital cities saw growth of 20.82%. Hobart, Canberra and Sydney have seen the largest house price increases in the past 12 months, at 28.06%, 25.52% and 25.23% respectively.

Head of Research at CoreLogic, Tim Lawless notes that the sharp rise in values ​​is starting to price some people out of the market, which could slow momentum.

Source: CoreLogic

Head of Research at CoreLogic, Tim Lawless notes that the sharp rise in values ​​is starting to price some people out of the market, which could slow momentum.

“House prices continue to outpace wages by a ratio of about 12:1. This is one of the reasons why first-time homebuyers are becoming an increasingly smaller part of the housing demand. New listings are up 47% since the recent low in September and home-focused incentives like HomeBuilder and stamp duty concessions have now expired.”

“Combining these factors with the subtle tightening of credit ratings for November 1, it is very likely that the housing market will gradually lose momentum.”

CoreLogic also notes that unit markets have continued to grow at a slower rate compared to homes. In major capital cities, Sydney home prices are up 30.4% compared to a 13.6% increase in unit values, while Melbourne home values ​​are up 19.5% over the year compared to a increase of 9.2% in unit values. This trend is less evident in regional areas of Australia, where the performance gap between homes and units is relatively small.

Tim Lawless believes that with home prices soaring, there will be a shift towards more affordable options.

“As homes become less affordable, we expect more demand to be diverted to the higher-density sectors of the market, especially in Sydney, where the gap between the average home and unit value is now close to $500,000. become a larger part of new housing financing, we may see increased demand for medium to high density housing.Investor demand across the unit sector could strengthen as overseas borders open up, likely to have a positive impact on rental demand, especially in the inner-city unit areas.”

Spring sales increase

Now that the spring sales season is in full swing, there is some relief for buyers as the number of offers starts to increase.

As of September 5, CoreLogic notes that new listings are up 47%. Quotations are now 5.2% above the five-year average.

Tim Lawless believes this is a good thing for buyers, given the tight conditions we’ve been seeing for months

“More offers means more choice for buyers and less urgency in their purchasing decisions. FOMO is likely to remain a hallmark of the market, while listings remain below average so far. However, there is a good chance that the advertised supply will increase further in the spring and early summer, which cannot be compensated by a commensurate increase in demand due to deteriorating housing affordability and a subtle tightening of credit availability.”

Vendor brand data such as auction clearing rates, days on the market and supplier discount rates remains above average, indicating that this is still a seller’s market, but conditions could rebalance for late this year or early next year. buyers,” said Mr Lawless. said.

New and total lists, 28 day rolling count

Source: CoreLogic

Looking ahead CoreLogic believes the housing market will continue to see prices rise, but there are signs that momentum could slow.

Tightening lending standards through APRA’s service buffers and the potential for the RBA to raise interest rates could be a factor affecting buyer demand. While the deterioration in affordability is also contributing to some sectors of the market being priced.

CoreLogic notes, “Higher interest rates have typically been an inflection point for housing markets, with a rise in interest rates typically corresponding to lower home value growth or the start of a downturn. With household debt near record highs, borrowers are likely to be more sensitive than usual to the cost of debt. A rise in interest rates will probably signal that the housing market is entering a downward spiral.’

However, with improving consumer confidence and easing restrictions on the East Coast, the short-term outlook for property prices remains positive.