Australia’s property prices to rise after June CPI rules out RBA rate hike: PropTrack
Property prices are tipped to rise at a faster pace nationally in the coming months following Wednesday’s CPI data as Brisbane’s record run of price growth could be nearing the end.
Australia’s property prices have increased to a fresh high and are likely to rise faster in the coming months after inflation did not accelerate enough to force the Reserve Bank into delivering another interest rate hike this month.
PropTrack’s Home Price Index showed national dwelling price growth slowed from 0.18 month in June to a 0.08 per cent uplift to $795,000 in July, which is considered the slowest month for home price growth. Prices are up 6.3 per cent for the year as smaller cities drive growth.
Perth led monthly gains after rising 0.88 per cent to a new peak of $736,000, adding to the 22.78 per cent increase in the past year, while Adelaide lifted 14.8 per cent annually following a 0.6 per cent increase in July.
Sydney remained the most expensive capital city with prices up 0.12 per cent to a fresh peak of $1.118m, while Melbourne dwellings fell for the fourth consecutive month by 0.21 per cent to $803,000 – 4.4 per cent below its March 2022 peak.
PropTrack senior economist Paul Ryan said that the prospect that the next move for interest rates will now be down instead of up would help to improve confidence in the housing market, which had been impacted by that looming threat.
“Wednesday’s CPI read will be a bit of a positive for the market. There was a bit of interest rate uncertainty holding people back, and my read is that the rate hike is off the table now,” he said.
“The expectation is that we’ll see trends return to normal in spring, not, not the rates of growth that we’re seeing earlier in the year, a bit more sedate, just, just because, mainly affordability constraints are putting pressure on.”
Consumer price growth for the June quarter lifted for the first time in 18 months to 3.8 per cent in the year compared to 3.6 per cent in March. Signs that inflation did not rise as much as some had feared was enough for financial markets to rule out the chance of a 14th interest rate rise on Tuesday, with the next move now seen as a cut by February.
Brisbane further cemented its crown as the second most expensive capital with prices up 0.3 per cent, or 13.9 per cent annually to $853,000. The city which will host the Olympic Games in 2032 has seen prices surge 72.2 per cent since the onset of Covid-19 in March 2020.
Mr Ryan said that growth to Brisbane property prices have been driven by interstate migrants after cheaper housing, but with that no longer the case it remained to be seen how much further growth was possible.
“Now that housing is no longer affordable, I would expect that will put a bit of a slowdown on growth in Brisbane. If we look within Brisbane the outer regions such as Ipswich and Logan are still rising which says that people are looking for affordable pockets within that market,” he said.
“Growth in Brisbane will naturally slow down, less so in Adelaide and Perth where it is still very affordable compared to the other major capitals.”
It is not the first time Brisbane has been the second-most expensive market, holding the place for several months in 1980, a period in 1996-97 and again in 2009.
Melbourne recorded a fourth consecutive month of falling prices. However, prices are down just 1.5 per cent over that period, while the ACT was 5.2 per cent of its peak after prices edged up by 0.1 per cent to $843,000.
Mr Ryan said that both areas have been better at increasing housing supply which has helped to keep prices in check despite rapid population growth in the past two years.
“Melbourne has done a much better job at building homes than Sydney. Housing construction has been more positive in Melbourne, and that has kept a lead on housing costs in Melbourne.
“The ACT has done well in terms of housing construction, which points to the solution for other markets to balancing supply and keeping prices in check.“
Data from the Australian Bureau of Statistics showed that dwelling approvals fell 6.5 per cent nationally in June. Victoria has the highest number of dwellings approved at 4127 – a 1.2 per cent monthly increase, while NSW fell 1.9 per cent.
Originally published as Australia’s property prices to rise after June CPI rules out RBA rate hike: PropTrack