Two of the most populous cities in Australia, Sydney and Melbourne, are seeing property prices rising for the first time since 2017, which analysts are attributing to lower mortgage rates and improved sentiment.
The housing values of Sydney inched up 0.1 per cent, the first time since the market last peaked in July 2017, while dwelling values in Melbourne increased by 0.2 per cent, a positive movement not seen since November 2017.
Overall, the 0.2 per cent decrease in national dwelling values was the smallest month-on-month decline since March 2018, largely because of performance of Sydney and Melbourne, the capitals of NSW and Victoria respectively.
Analysts opined that the improvements were largely organic but added that the federal election in May and a 25 basis point cut to the Reserve Bank cash rate in early June may have also played a part. Additionally, luxury properties seems to be the ones leading the market recovery trends in both Sydney and Melbourne. Analysts do see that prices may reach their trough around the end of 2019 before rising a little in 2020. They are, however, cautious about a sudden surge in economic growth, citing that consumption growth may remain subdued for some time given the current levels of household debt.
On a quarterly basis, every capital city housing market has recorded a drop in value, highlighting the broad geographic scope of this housing market downturn. The largest falls over the past three months were recorded in Darwin and Perth where the weaker trend has persisted since mid-2014.
Although rental growth is generally sluggish, most cities are seeing rental rates rising faster (or falling slower) relative to dwelling values.
All in all, most would agree that stability within the federal government and the removal of uncertainty surrounding changes to negative gearing and capital gains tax discounts have surely boosted confidence in Australia’s housing market.