Australia: Dwelling price slowdown continues - Westpac

Matthew Hassan, Research Analyst at Westpac, notes that Australia’s CoreLogic home value index dipped 0.1% in Nov after holding flat in Oct as annual growth slowed to 5.5%yr, more than halving the 11.4%yr peak pace of growth recorded back in May.

Key Quotes

“Note that the CoreLogic indexes were overhauled in Aug and now provide a much better guide to price changes. Whereas previously it would take 3-6mths and/or multiple measures to confirm a market shift, the new series appear to give much cleaner signals month to month and are now the clear 'benchmark' for Australian dwelling prices.”

“For Nov, the signals continue to be unambiguously soft. The last 3mths have seen a price growth slow to a 0.5% annual pace nationally, likely a slight fall in seasonally terms (Sep-Nov typically sees some firming in prices).”

“Overall, the slowdown nationally continues to track a similar path to that seen in 2015-16 – both periods reflecting the impact of 'macro prudential' tightening measures. These measures involve both temporary and ongoing impacts, as lenders initially move to become compliant with new limits and then as these restrictions exert a continued restraint. A key question in coming months will be where the market settles as initial adjustment effects wash out. A repeat of the swift re-acceleration in price growth seen in 2016 is highly unlikely given the boost rate cuts gave at the time is unlikely to be repeated.”