ATTN: Financial editors
01 April 2024
(Bloomberg) -- Australia’s housing market extended gains to a 14th consecutive month in March amid declining affordability and borrowing costs at a 12-year high which cooled momentum in two of the nation’s biggest cities.
Bellwether Sydney advanced 0.3% while prices in Melbourne stabilized, resulting in an overall increase of 0.6% for Australia’s major cities - unchanged from February, property consultancy CoreLogic Inc. said in a report on Tuesday. Perth and Adelaide led the pack, with gains of 1.9% and 1.4% respectively.
But the overall rise in house prices in Australia’s key cities has slowed from a peak in mid-2023, according to Tim Lawless, research director at CoreLogic.
“Since then, we’ve seen a whole bunch of things happen that have probably slowed the market, including further rate hikes, worsening affordability and of course we’ve also seen a peak in overseas migration,” he said.
Australia’s property market surprisingly recovered last year despite the Reserve Bank’s aggressive policy tightening campaign since May 2022. CoreLogic’s national home value index has advanced 33.4% since the onset of Covid-19, with Sydney climbing 25.4% during that period.
The RBA’s tightening cycle, combined with an acute shortage of dwellings and booming population growth, has sparked a housing crisis in parts of Australia. The problem is particularly acute in Sydney where buyers are being priced out of the market given as an average home costs 13-times income.
The RBA left interest rates at 4.35% for a third straight meeting in March and dropped its hawkish bias as inflation continues to moderate. Financial markets and economists expect the central bank will embark on an easing cycle in the second half of this year.
Lawless said any cuts to...
