House price growth in Australia has slowed down in recent months.
According to CoreLogic’s March Hedonic Home Value Index, prices in Australia’s capitals fell for the fifth consecutive month, leading to a 0.8 per cent year-on-year increase. This number is far lower than May 2017’s peak of 11.4 per cent.
Melbourne and Sydney property prices fell 0.3 per cent for the month of March, whereas Adelaide dropped 0.2 per cent. On the other hand, Hobart experienced a growth of 1.5 per cent.
The NAB expected the trend to last for another two years. Chief economist Alan Oster said the bank predicted a decline of 3.4 per cent in Sydney over 2018 and just a 0.1 per cent growth in Melbourne, with a national average decline of 0.8 per cent.
“Looking forward, it is hard to see a near term rebound in Sydney and Melbourne house prices, especially given consumer concerns about the cost of living and high levels of household debt,” said Oster.
“While it is unlikely that the RBA will be increasing rates anytime soon, consumers remain very cautious. We do not expect that cautiousness will abate any time soon.”
However, CoreLogic’s head of research Tim Lawless disagreed with the prediction. “If current trends continue we could see a return to growth in only a few months,” he said. “It now looks like many of the banks are beginning to loosen [credit] policies and are starting to lend to investors again, so the market is finding a floor.”