Australian housing market reaches turning point

House prices across the combined capital cities in Australia increased over the March quarter for the first time in a year, indicating that the market has reverted back to a multi-speed market, according to Domain’s Quarterly House Price Report.

Although the house prices went up in Sydney, Adelaide and Perth, other cities saw more balanced conditions during the quarter.

Domain’s data showed that while house prices stabilised in Melbourne and Brisbane, weaker conditions were evident in the smaller capital cities where prices fell over the March quarter and this included Canberra, Hobart and Darwin.

According to Domain, one of the drivers for improvement in the housing market was “the unseasonally weak flow of new listings” as sellers retreated from the market , resulting in total homes for sale standing at 15% below the five-year average for the combined capitals.

However, the recent pause to interest rate hikes could serve as a further sentiment changer needed for Australia’s housing market.

“As prices lift in certain areas, it’s a timely reminder that interest rates are not the only factor influencing housing activity and prices,”

Population growth is rebounding faster than anticipated, with record levels of overseas migration playing a driving role in our housing markets. Extremely tight rental markets are also making purchasing more attractive and may shift some to buy, given the current challenges of securing a lease,” Nicola Powell, Domain’s Chief of Research and Economics, said.

“Population growth is rebounding faster than anticipated, with record levels of overseas migration playing a driving role in our housing markets. Extremely tight rental markets are also making purchasing more attractive and may shift some to buy, given the current challenges of securing a lease.”

According to Powell, a slowing inflation quicker than expected could also have a positive impact on consumers and the push needed for buyers and sellers to return to the market.

The more stable environment would also suggest that interest rates were at, or close, to a peak.

“Buyers have adjusted to this new norm of higher costs of debt and, as we reach the peak cash rate, it will provide them with a better understanding of borrowing capacity,” Powell added.