Australia’s housing market continues to slow after the Reserve Bank of Australia’s (RBA) 0.25% interest rate hike last month.
CoreLogic’s daily dwelling values index has lost momentum following the RBA’s Melbourne Cup Day rate hike, led by Melbourne and Sydney:
CoreLogic’s preliminary auction results over the weekend also continued to soften, recording a clearance rate of just 66.9%, down slightly from the prior weekend (67.0%, revised down to 60.7% at final figures):
Indeed, final clearance rates have fallen sharply across Sydney and Melbourne since peaking in May this year.
Sydney’s auction clearance rate fell from a peak of 73% in May to 63% in the first weekend of December, whereas Melbourne’s clearance rate fell from a peak of 70% in May to 58% in the first week of December.
In turn, the combined capital city clearance rate has been dragged down from 71% in May to 61% in the first week of December:
Over the weekend, leading Sydney real estate agent and auctioneer, Tom Panos, said that that RBA’s 13th rate hike had “tipped the bucket” on the market, after only two out of nine of his auctions sold:
“Ladies and gentlemen, welcome to the 13th rate rise that I think has tipped the bucket”…
“If you go listen back the last few months, what I have been saying is that at the end of November and December, stock levels grow and buyers get lethargic”.
“Quite frankly it took 12 rate rises and nothing had happened. And then on Melbourne Cup Day, that rate rise that got us all by surprise after having a pause for months has now kicked in”…
“Go look at all the data companies. The data is there in black and white”.
“I had Louis Christopher on [last week]. He’s basically saying the only markets he sees that are going to go up next year are Brisbane and Perth, and Adelaide potentially. He’s not feeling bullish about Sydney or Melbourne”.
Panos’ sentiment certainly seems to be reflected in the data, at least as it pertains to Sydney and Melbourne.
The RBA’s rate rises finally appear to have tipped demand at the same time as listings levels are growing:
Source: CoreLogic
That’s a recipe for house price corrections for those two markets, which could pull values down nationally.
