House prices across Australia have stabilized during the past week after months of falling.
House prices across Australia seem to have stabilized after months of falling, with prices in Melbourne and Sydney remaining relatively unchanged this week. For the last month, prices in Melbourne dropped by 0.1% and Sydney, by 0.6%.
Nationally, housing values have fallen 0.8% since September 2016. On a yearly basis, price growth in Melbourne remains strong at an increase of 6.9%, but muted from the previous year. Sydney, however, registered a decrease of 0.3%.
CoreLogic’s head of research Tim Lawless said this was fuelled by tighter credit policies particularly focused on investment and interest-only lending, which reduced demand from that part of the market.
“We think there is already evidence that the slowdown in house prices is stabilising,” said David Plank, Head of Australian Economics at ANZ Bank.
“Base effects mean the annual house price figures will continue to slow for a while yet even if monthly prices are stabilising, but we would caution against focusing on the annual change over the seasonally adjusted monthly move as it will mean that turning points are missed.”
Could this week’s price stabilization indicate a turning point for the housing market?
Australia House Prices: housing undersupply vs population growth
According to data released by the Australian Bureau of Statistics (ABS) last June, Australia’s residential population soared by 389,100, or 1.6%, to more than 24 million persons in the year to March, the fastest increase since 2014. However there was a 3.3% decline in residential construction, with the last quarter of 2017 recording a 0.7% decline.
New-build apartments like the upcoming Palladium Tower in Southbank, are being constructed to address the severe lack of housing in Melbourne.
Palladium Tower is strategically located in the Melbourne CBD area, right next to Fishermans Bend, Australia’s largest urban renewal project covering 485 hectares in the heart of Melbourne. By 2050, the area is expected to provide housing for up to 80,000 people, and employment for 40,000.
AMP Capital’s Shane Oliver told The New Daily that while Australia was near equality in construction versus population growth, for the most part, yet the last decade of construction had failed to keep up with Australia’s record population growth.
Commsec Senior Economist Ryan Felsman said, “If you look at Melbourne there’s 120,000 people moving to it per annum, but only 75,000 houses being built,”
Last year, the Urban Development Institute of Australia warned that Victoria could have a shortfall of 50,000 houses by 2020. ABS figures released in June show the state gained 144,400 to 6.3 million persons, a 2.3% increase compared to the previous year at 2.1%.
All the signs point to increased demand in the face of short supply over the next few years, especially in places like Melbourne where yearly price and rental rises have been consistent. With construction of new housing unable to match demand for the foreseeable future, opportunities continue to abound for the investor.
By Ian Choong
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