When will the market bottom out?
Despite CoreLogic reporting a consistent cooling of Australia’s housing market decline since the back end of last year, new research from the firm has warned that the end of the cycle may not be near.
According to Tim Lawless, CoreLogic’s research director, despite an easing of the market’s downturn evident in the data as far back as September 2022, “it’s still too early to call a bottom of the cycle.”
New data from the leading property research outfit found national value falls have stabilised throughout February, led by Sydney, which registered its first month-on-month value increase (0.1 per cent) in over a year.
CoreLogic’s Daily Home Value Index (HVI) ticked up 0.3 per cent across the five largest capital cities through month-to-date, led by value increases of 0.5 per cent in the NSW capital in the opening 15 days of March, followed by 0.2 per cent rises in Melbourne and Perth, and maintenance of Brisbane’s values from February.
However, despite the positively trending data, Mr Lawless warned the turbulent downswing is not complete due to the presence of “considerable downside risks.”
The looming threat of further interest rate increases from the recently anointed 3.60 per cent cash rate, partnered with the fact that the full impact of the Reserve Bank of Australia’s (RBA) previous cash rate increases have yet to be fully felt by national home owners.
“Additionally, economic conditions are set to weaken through the middle of the year, as household savings buffers are being depleted and labour markets are likely to loosen further,” he added.
Current positively trending home values have coincided with lower-than-usual flows of new listings onto the market, down 19.9 per cent when compared to the previous five-year average for this time of year.
“Such a low advertised supply is likely to be a central factor keeping a floor under housing prices despite a clear drop in demand,” he said. Adding new listings is “one of the key metrics to watch.”
“Any sign of a larger-than-normal level of freshly advertised stock could signal that prospective vendors aren’t willing or able to wait out the downturn any longer.”
The expert explained, “A rise in advertised supply to above-average levels could be a signal this recent trend of growth has run out of steam.”
“Given the uncertainty ahead of us, the next few months will be critical to understanding whether the housing market is indeed moving through an inflection point or if it is simply the eye of the storm,” he concluded.
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