War and interest rates expected to cool housing market
·3 min
The episode opens by reporting that house prices in capital cities increased in March, but analysts note the pace of growth is slowing. New data from Cotality shows a 0.7% rise in home values for March, with all capitals up except Sydney and Melbourne. Overall dwelling values are 2.1% higher for the first quarter of the year. Gerard Berg, Cotality's head of research, states that overall growth has slowed. He explains that Sydney and Melbourne are seeing a supply response, with listing numbers rising to five-year average levels, leading to a more balanced market. In Victoria, house price rises have remained cool due to heavier land taxes on investment properties and new planning laws to boost supply. A notable shift is highlighted: Adelaide's median house price has surpassed Melbourne's for the first time. Perth experienced the biggest increase, up 7% for the first quarter. Berg discusses the widening gap between capital cities, which began around October last year when the RBA signaled a policy shift toward rising rates. Since then, Sydney and Melbourne have softened compared to mid-tier capitals like Perth. This widening gap has been evident over the last couple of months. In Perth, a strong imbalance persists between demand from population growth and constrained supply. Experts, including REA Group senior economist Eleanor Craig, say the slowdown in house price growth is set to continue. Craig cites recent interest rate rises and the war in the Middle East as significant factors affecting house price growth. The episode concludes by noting that these economic pressures might make people think twice about purchasing new homes.
