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While the winter market does normally slow as less listings come online, property values don’t follow suit – but this year appears to be operating differently.
CoreLogic’s daily home value index has eased in the past four weeks – an unusual trend during the winter months.
National home values have risen just 0.5 per cent over the four weeks to 18 July, which is a drop from the 0.7 per cent gains recorded just one month ago.
According to CoreLogic Australia economist Kaytlin Ezzy, it’s not typical of the time of year, despite the sales and listing activity tending to show “seasonal easing” throughout the winter months.
Raising the observation that “the trend in housing values hasn’t historically displayed seasonal behaviour,” she did offer an explanation as to why this is occurring.
“The recent easing in growth has likely been linked to persistently low consumer sentiment and stubbornly high inflation and a rise in advertised stock levels in some markets,” Ezzy remarked.
The number of new listings has also been cited as a potential reason for the slowdown, with the flow of new listings holding between 5 per cent and 10 per cent above the previous five-year average since April.
According to Ezzy, it means overall stock levels are accumulating and reducing buyer urgency, thanks to more options being available. In turn, this is providing buyers with more ability to negotiate when push comes to shove.
That higher proportion of new listings is also helping reverse a previous shortage in listings.
Over the four weeks to 14 July, Ezzy raised that 137,000 properties were advertised for sale across the country, which is almost 20 per cent less listings than is typically seen in the winter months.
The economist noted that while still below the previous five-year average, “there has been a steady rise from the listing levels seen in March, when advertised supply was approximately -23 per cent below average”.
The trend is most pronounced in more expensive markets – with Sydney seeing the most noticeable slowdown. It’s also more apparent across house price growth figures than unit price growth.
That points to affordability as an “important determiner for the pace of growth”, with Ezzy raising the more affordable end of the market as “showing more resilience to the elevated interest rate environment”.
To spring and beyond
Based on CoreLogic’s data, the road ahead for growth appears unlikely to change, with Ezzy stating that housing values have previously been buoyed by low listing levels along with the expectation of rate cuts towards the end of 2024.
But now, that forecast has dampened.
“With the monthly CPI figures for April and May coming in higher than anticipated, the expected timing for the first rate cut has been pushed back by some economists, and consumers are becoming resigned to the fact that interest rates could remain higher for longer,” Ezzy acknowledged.
Since the beginning of the rate hiking cycle back in mid-2022, the economist also pointed out that the average new mortgage repayment for Sydney residents has jumped by “approximately $2,200 per month”, which she labelled as adding significant pressure to household budgets already feeling the heat from high cost of living pressures.
All in all, the economist said it’s “unsurprising the potential for mortgage rates to stay higher for longer has dampened some buyers’ appetites”.
“We could see value growth ease further as affordability challenges and low sentiment continues to weigh on demand,” she concluded.
ABOUT THE AUTHOR
Grace Ormsby
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.
