House Prices Rise Again Despite RBA’s Tightening Bias

CoreLogic capital city house prices rose 0.7% m/m in April, the second consecutive rise, bringing the annual rate to -8.3%. The trough now appears to have been in February at -9.1% y/y. Prices are now 8.3% below the April 2022 peak, a lot better than forecasted. A shortage of listings, increased expectations that tightening is done, lower prices and a surge in immigration have provided support to the housing market. The national index rose 0.5% m/m after 0.6% in March.

• House prices are still 8.8% above trend up from 7.6% in February. The turn in home prices is going to add to affordability pressures.
• Prices in Sydney rose 1.3% m/m after 1.4%, the third consecutive rise, to be down 10.7% y/y up from -12.1%. Melbourne rose 0.1% m/m to be down 8.9% y/y (March +0.6% and -9%).
• CoreLogic’s research director Lawless said that they are observing home prices rising across most of Australia. He noted that auction clearance rates are slightly above their long-term average and home sales are “trending around” the 5-year average.
• Lawless also observed that “while overseas migration would normally have a more direct correlation with rental demand, with vacancy rates holding around 1% in most cities, it’s reasonable to assume more people are fast tracking a purchasing decision simply because they can’t find rental accommodation.”
• “The last time we saw housing values trending higher through a rising interest rate environment was during the mid-to-late 2000’s when the mining boom was underway.This period was also characterised by surging net overseas migration,” Lawless noted.
• See press release here.

Source: MNI - Market News/Refinitiv