Highlights of analysis from Westpac IQ about housing costs in major cities throughout Australia. Westpac noted that growth in dwelling prices for major cities softened in 2017, and is expected to continue into 2018, but December-January data can be unreliable as low transactional volume negatively impacts the accuracy of the data collected in that period. Analysts will be waiting for February data to develop a clearer picture of housing inflation expectations in Australia for 2018.
Key quotes:
- The weak finish to 2017 for Australia's housing markets extended into early 2018. The CoreLogic home value index, covering the eight major capital cities, dipped another 0.5% in Jan to be down 1.0% since Oct. Annual price growth slowed to 3.2%, from a peak of 11.4% in May and the slowest pace since Sep 2016.
- Note that strong caveats apply to all housing data over the Dec-Jan periods as transactions are typically 20-30% lower over the housing market's holiday 'off season'.
- Price weakness continues to be concentrated in Sydney, where annual price growth has pulled back to 1.3%yr, now the slowest pace across the major eastern markets. Latest monthly updates suggest the pace of price contraction may be easing a little in seasonally adjusted terms.
- Price growth was coming from much weaker starting points across the other capital cities and showed more muted slowdowns in 2017. Annual price growth has slowed notably in Adelaide.
- Overall, this is another soft update although the information content of the January figures is perhaps not as useful as other releases. With the market re-opening in February, the next few weeks will be a truer test of conditions.
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