Residex has released its house price results for the month of March, which revealed a 0.62% increase in house values nationally over the month and a 0.77% rise in unit values. Over the year, house values nationally rose by 6.08%, whereas unit values increased by 7.22% (see below table).
Nevertheless, Residex believes that price growth has peaked for this cycle, due to the following factors:
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The cost of a home has risen to a level where the number of first home buyers capable of being part of the current growth cycle is limited.
The RBA is letting all who want to listen know that there will probably be no further interest rate cuts and that all should expect rates to rise in the next 12 months.
Consumer sentiment is not unexpectedly strong given the various warnings about a rising unemployment level.
Very significant “jawboning” by our Treasurer that we all have to take pain to allow our Federal Budget to return to surplus and government debt levels to be returned to more acceptable levels.
The graph points to a market that is reaching the peak of its growth for this cycle. This is further evidenced by the lower auction clearance rates recently, which are now in the low 70% region.
According to Residex, the median Sydney house price has hit a whopping $795,500, with gross rental yields plummeting to just 3.99%. Melbourne’s median house price has also climbed to $619,000, with its gross yield slumping to a mere 3.71%.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
