Key property data analysts including CoreLogic, SQM Research and Proptrack believe Australia’s housing downturn is over.
Eliza Owen from CoreLogic says the available data suggests the national housing market downswing likely bottomed out in early March, led by Sydney which bottomed out a month earlier.
“A record return in overseas migration was unexpected, and it has left housing demand far outstripping supply, which has contributed to the start of a more sustained upswing in value”, Owen said.
Challenger chief economist Jonathan Kearns agrees noting “immigration is going to be stronger than developers anticipated some 12 to 24 months prior, and we saw in the 2000s how unexpected immigration can be a fillip to prices”.
SQM Research managing director Louis Christopher argued improving auction markets and rising vendor asking prices are clear evidence the Sydney and Melbourne housing markets have bottomed out.
“I believe the worst is over for the Sydney and Melbourne”, Christopher said.
“We’ve still got inflation out there and housing historically has been a good hedge against inflation. We’ve also got record population growth, so we’re seeing a surge in underlying demand for accommodation”.
You cannot argue with the data. CoreLogic’s daily dwelling values index has rebounded 1.3% since 7 February, driven by a 2.4% rise across Sydney:
Auction clearance rates have rebounded sharply, which have historically been a solid leading indicator for house prices:
Growth in new mortgage commitments has also rebounded, albeit not as much as prices:
Finally, dwelling price expectations in Westpac’s consumer sentiment release keep rising and tends to lead actual prices (chart from Alex Joiner at IFM Investors):
With Australia experiencing record high immigration and a record tight rental market, and the RBA at or close to the peak of the interest rate cycle, the seeds are sown for rising house prices.
I expect prices to launch when the RBA inevitably cuts rates late this year, which will inevitably be followed by APRA cutting the 3% mortgage serviceability buffer.
When those things happen, borrowing capacity will expand and house prices will take off.
2023 is shaping as a boom year for Australian house prices.
