Australia Housing Boom Fades as Melbourne, Sydney Pull Back
Australia’s housing boom appears to be over, with growth is poised to fall as low as 5% this year after a 22.1% rise in 2021 -- the strongest since 1988.
A softening housing market cooled further in December, rising 1% nationally as the boom in high-end properties that has underpinned the record run tapered significantly, according to CoreLogic Inc. data released Tuesday.
Melbourne, Australia’s second most-populous capital city, reported its first price decline since October 2020, slipping 0.1% last month, the data show. Sydney also posted its slowest month since then, recording an increase of just 0.3%. The upper end of the housing market, which led the boom, is now leading the slowdown, with prices up 2.6% in December, compared with a 3.7% rise in cheaper houses, the data show.
“A surge in freshly advertised listings through December has been a key factor in taking some heat out of the Melbourne and Sydney housing markets, along with some demand headwinds caused by significant affordability constraints and negative interstate migration,” according to Tim Lawless, research director at CoreLogic.
CoreLogic’s Lawless is predicting a “sharp slowdown” in the market this year, with growth at 5%-7%, as “affordability constraints along with tighter credit conditions drag down demand.”
What Bloomberg Economics says:
“Any further appreciation in major markets is likely to be milder in 2022 due to strained affordability, macro prudential tightening, and a pickup in the stock of properties available for sale”
James McIntyre, economist. For the full note, click here
Goldman Sachs Group Inc. economists see dwelling prices plateauing this year “alongside a fading impulse from policy settings and increased dwelling supply,” while Capital Economics sees a 5% fall in prices in the second half of the year.
“Storm clouds are gathering for the property boom,” said Shane Oliver, chief economist at AMP Capital Markets. “At present, the national average property downswing now starting to unfold looks like just another cyclical downswing.”
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