1. Australia’s housing market is continuing to slow after a 0.25% interest rate hike by the Reserve Bank of Australia last month.
2. Melbourne and Sydney are leading the slowdown in the housing market, with the daily dwelling values index losing momentum.
3. Auction clearance rates in Sydney and Melbourne have fallen sharply since peaking in May.
4. Real estate agent Tom Panos believes that the rate hike has negatively impacted the market, with stock levels growing and buyers becoming lethargic.
5. Listings levels are growing at the same time as demand is tipping, which could lead to house price corrections and a decline in national values.
Assessing the Cooling Effect of the RBA’s Latest Rate Increase on Property Values
Australia’s housing market is experiencing a noticeable slowdown following the Reserve Bank of Australia’s (RBA) recent 0.25% interest rate hike. CoreLogic’s daily dwelling values index indicates a significant loss of momentum in the wake of the RBA’s Melbourne Cup Day rate increase, with Melbourne and Sydney leading this trend.
Auction Clearance Rates Reflect Market Softening
Preliminary auction results from the past weekend show a continued softening in the market, with a clearance rate of just 66.9%. This figure is a slight decrease from the previous weekend’s 67.0%, which was later revised down to 60.7%. This decline is particularly evident in Sydney and Melbourne, where final clearance rates have dropped sharply since peaking in May this year. Sydney’s auction clearance rate decreased from a May peak of 73% to 63% in early December, while Melbourne’s rate fell from 70% to 58% over the same period. Consequently, the combined capital city clearance rate has declined from 71% in May to 61% in early December.
Real Estate Experts Acknowledge Market Shift
Tom Panos, a leading Sydney real estate agent and auctioneer, commented that the RBA’s 13th rate hike has “tipped the bucket” on the market. He observed that after 12 rate rises, the market remained relatively unaffected, but the unexpected rate hike on Melbourne Cup Day has now started to impact the market significantly. Panos highlighted that data from various sources corroborate this trend, with predictions indicating that only Brisbane, Perth, and potentially Adelaide might see market growth next year, while prospects for Sydney and Melbourne are not as optimistic.
Market Dynamics Indicate Potential Price Corrections
The combination of the RBA’s rate hikes and increasing listings levels is creating conditions ripe for house price corrections, particularly in Sydney and Melbourne. These corrections could potentially influence property values on a national scale.
The Australian housing market is clearly feeling the effects of the RBA’s consistent interest rate hikes, with the 13th increase marking a turning point in market dynamics. The softening of auction clearance rates and expert commentary suggest a cooling period, especially in major cities like Sydney and Melbourne. This shift underscores the need for potential buyers and sellers to stay informed and adapt their strategies in response to changing market conditions.