Data suggests that housing prices in Sydney and at the national level have already stopped declining, said Macquarie analysts in a research note.
They said that it now looks “very likely” that housing prices are again increasing modestly at the national level. They noted at the same time that significant differences remain between locations and types of housing.
The analysis is based on an assessment of seasonally adjusted housing price data from APM and
CoreLogic RP Data.
The analysts pointed out that home price growth and activity are quite seasonal – and thus require that the data be seasonally adjusted to get a clear view of housing price trends.
“After seasonal adjustment, monthly growth in APM’s measure of capital city dwelling prices has picked up modestly in recent months,” they said.
This observation is based on data only up to November 2017.
Using CoreLogic’s data to mid-January 2018 shows a clear improvement in seasonally adjusted housing price growth, said the analysts. The caveat is that sales volumes in January are “very low”.
The analysts said they do not expect a repeat of the 2016 bounce back in price growth for a few reasons, including the fact that 2016 saw 50 basis points of cash rate cuts.
“This year is likely to be more about speculation on the timing of eventual rate hikes,” they said.
They also cited as reasons the fact that banks have become more discriminatory in lending and that housing investment is now less attractive because of higher interest-only lending rates and low yields.
Rising interest rates will eventually be a major stumbling block for housing prices, as has been the case historically, they noted.
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