Australian dwelling prices: Lift carries into 2020 – Westpac

Matthew Hassan, Senior Economist at Westpac noted that “the recovery in Australian dwelling prices that began in mid-2019 has carried into early 2020, albeit with some moderation in monthly gains from the very strong finish to 2019. “

Key Quotes:

“The CoreLogic home value index, covering the eight major capital cities, rose 0.9% in Jan, a touch down on the 1.2% gain in Dec month and the very strong 2.0% gain in Nov. Annual price growth lifted to 5.2%yr.

Prices nationally have now recovered over two thirds of their 2017-19 correction but are still 3% below their 2017 peak. At the current pace of monthly gains, they should regain that level by mid 2020.

Several factors contributed to the turnaround in 2019 including: reduced uncertainty around housing-related tax policy following the Federal election; 75bps in official rate cuts from the RBA; and some easing in regulatory guidelines around loan serviceability assessments.

All capital cities and regional areas within states recorded gains in Jan with more evidence of price gains starting to show through outside the Sydney and Melbourne markets that have led the cycle.

Note that seasonal fluctuations do affect prices through the Christmas-New Year period, with gains in Dec and Jan typically a touch softer than in Nov. That said, the moderation from the very strong Nov rise is consistent with our view that gains will moderate as prices in the key Sydney and Melbourne markets start to near previous peaks and affordability constraints re-emerge.”