RP Data has today released its home price results for the month of June, with the daily index recording a solid 1.4% bounce following May’s 1.9% decline.
As shown above, value gains were recorded across all major markets, except for Adelaide and Darwin.
The rebound is values in May was expected, given the daily index typically records solid falls in May followed by a bounce in June (see next chart).
Nevertheless, the house price cycle does appear to have peaked, with annual growth across most major markets and nationally starting to trend lower (see next chart).
Still, the Australian housing market did record 10.1% growth in the 2013-14 financial year, which is strong in anyone’s language.
According to the RP Data media release:
“Looking through the monthly movements, the trend in performance is much more important. It shows that the quarterly rate of growth peaked across the Australian housing market in August last year at 4.0 per cent…
“With interest rates remaining low for the foreseeable future, it is doubtful that housing values will start to slide, at least not at a macro level. What is more likely is that natural affordability constraints will start to dent buyer demand, as will the low rental yield scenario’s that are very much evident across the largest capital cities of Melbourne and Sydney.”
Other indicators such as clearance rates are holding relatively firm which, according to Mr Lawless, further reinforces the notion that the housing market isn’t set to show a market correction.
Over the month of June, clearance rates strengthened and are generally around the high 60 per cent mark across the capital cities week on week. Average selling and vendor discounting rates also levelled out at relatively strong readings, and listing numbers remain relatively tight.
“Activity across RP Data valuation platforms has also held firm at relatively high levels suggesting mortgage demand isn’t dropping off just yet,” Mr Lawless said.
The below charts show the value changes for the various markets:
And rental yields are provided below, which suggests valuations in Melbourne and Sydney are becoming stretched:
