Property growth is peaking, but property price peak not reached
It looks like it's peaking but it's not a peak. Australia's property market is definitely slowing, but when and how will we know if it's come to a stop.
Residz Team 3 min read
The higher they’re going, the more they’re slowing. Like a mountain climber nearing the summit, property price growth is slowing. The difference is the climber sees the peak above. Property sellers and buyers, however, don’t know when prices will peak.
Growth slowing
In a recent news announcement CoreLogic’s Research Director Tim Lawless said Australian property price growth is slowing down across most of the capital cities.
However, he’s not calling it a property price peak yet.
The lure of the peak
Some potential sellers out there might wait for a peak to be called to list their home, hoping they catch the market at a time that maximises their returns. If so, that might prove to be a forlorn hope as such validation comes only once the market has moved further on, meaning they may well be chasing the selling price down as the market retreats!
“To categorise a market peak across a region, we would generally be looking for a consistent trend in negative monthly movements,” Mr Lawless says. “To date, the quarterly trend remains positive across the major regions.”
He said Darwin was the only capital city housing sector to record a negative quarterly change.
Peak rate of growth reached
However, the wild ride of the past 12 months appears to be over. Mr Lawless said that most capitals had moved through their peak rate of growth in March 2021. However, Brisbane, Adelaide, and regional Queensland were the exceptions, thanks largely to their relative affordability and low stock levels.
Brisbane’s median house price rose more than 30% in 2021, to reach $782,967, Adelaide property rose 23% to reach a median house price of $622,155.
Covid a factor
He said 3 factors that impact the market movements include:
- Policy ones like interest rates and credit availability.
- Market ones like the trend in advertised stock levels and housing affordability.
- Economic ones like labour market conditions and wages growth.
Surging Covid cases could be another factor, by affecting any policy tightening moves by APRA or RBA, said Mr Lawless. At the time of CoreLogic’s announcement, Australia’s case numbers hit a 7-day average of almost 108,000 cases.
Auction clearance rates
CoreLogic’s signs to look for to pick the peak include weakening of auction clearance rates. NSW, ACT and WA all reported clearance rates at 50% or below in the first weeks of January.
The data shows robust clearance rates in Brisbane, with 24 out of 33 properties offered at auction in early January sold successfully.
Number of homes for sale
Another sign is rising advertised stock levels. A surge in advertised listings through December was a key factor in taking some heat out of the Melbourne and Sydney housing markets. Stock levels had “pretty well normalised” in these markets, said CoreLogic’s head of residential research Australia, Eliza Owen.
Affordability constraints
Affordability is certainly a factor is a drop-off in demand in Sydney and Melbourne markets. Recent data showed Sydney’s median dwelling value is now $1.098 million, and its median house price is almost $1.5 million. Melbourne house prices fell 0.2% to a median $997,928, and dwellings sit at a median price of $795,108.
Peak then a decline
Buyers are watching for the peak of the housing market with great anticipation. It’s not hard to see why.
“Once a market peaks, the typical trend is that values will experience a period of decline,” Mr Lawless says. “The duration and severity of the decline is dependent on a broad range of both macro and micro factors.”
Image: Red Slate Mountain
