SYDNEY: Home prices in Australia’s two biggest cities fell in October, a sign that the red-hot rally in the housing market is losing steam amid a rise in listings, affordability constraints and expectations that rate cuts are still some way off.
Figures from property consultant CoreLogic, released on Friday, showed prices across the nation climbed a modest 0.3% in October, led by a 1.4% jump in Perth and a 1.1% rise in Adelaide, the more affordable markets.
Prices in Sydney, the most expensive Australian city, fell 0.1% for the first time since January 2023, while Melbourne dropped 0.2%. For the past three months, Sydney prices barely grew and Melbourne fell 0.8%.
“The housing outlook looks a little dimmer than it did a few months ago amid rising advertised stock levels, a slowdown in purchasing activity and a clear loss of momentum in value growth,” said CoreLogic.
“Capital city auction clearance rates held below the 60% mark through most of October, while private treaty metrics are showing a subtle rise in median days on market, especially in cities where advertised stock levels are above average.”
Australia’s housing market has defied expectations of a crash and reclaimed its pre-COVID pandemic high even as the Reserve Bank of Australia has raised interest rates by 425 basis points to 4.35% since May 2022 to tame inflation.
However, with underlying inflation proving sticky and the labour market resilient, markets are now expecting the first easing from the RBA won’t come until May next year, in contrast to central banks in the U.S. and Europe that have started their easing cycle.
The majority of economists still expect a rate cut in February.
The RBA has already cautioned borrowers against taking on too much debt once rates start to fall.
Source Homevior.in
