Resicom – Holiday Investment – 04-21 – LB

Australian Property Prices Cooling

Australian property prices in the major cities cooled down in August, rising only slightly as the boom in Australian property seems to be slowing.

According to the latest index of home prices from property consultant CoreLogic, prices for the combined capital cities in Australia rose by just 0.1 per cent in August, following a 1.5 per cent rise in July.

Annual growth in Australian property prices dropped to 9.7 per cent, from a year-on-year rise of 10.5 per cent in July.

Sydney saw no rise in property prices at all in August, following a rise of 1.4 per cent the previous month. Annual property price inflation remained robust in the city at 13 per cent. However, the rolling three-month price rise in Sydney has fallen to 0.3 per cent, from a peak of 6.3 per cent last year.

Melbourne still saw a rise of 0.5 per cent in August, taking the year-on-year increase to 12.7 per cent.

The slowing of the Australian property market is thought to have been partly caused by measures introduced by the main bank watchdog, the Reserve Bank of Australia (RBA), which has tightened standards on investment and interest-only loans, leading banks to raise rates on some mortgage products.

The move came as the bank was concerned about the effect of debt fuelled property speculation on banks and consumers.

CoreLogic head of research, Tim Lawless, commented: ‘We’re seeing capital gains in markets like Sydney, which were previously very strong, now being weighed down by affordability constraints and tighter lending conditions.’

He continued: ‘The knock-on effect is a curb in investment credit growth and higher mortgage rates for investment and interest only mortgages.’

National prices for Australian property rose by 0.6 per cent in the three-month period to August, the smallest quarterly rise since June 2016, and way below the peak quarterly rise seen in the three months to November last year.

Overseas property investors interested in Australian property may wish to watch and wait for the moment.

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