Weekend Edition: Has affordability finally hit home price growth?
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What is driving the recent changes in Australian house prices?
This week, what's going on with Australian house prices? Can they keep going up? Are they sustainable? And who is buying? Is it homeowners or investors? And where are they buying? Let's dissect some of the numbers in the latest data from Core Logic and look at the longer term trends as well. That's this week. The morning call from NAB with Phil Dobby.
The weekend edition.
Well, for better or worse, house prices in Australia do keep on rising. Is it just another month with more of the same? Up to now, twenty months in a row with rising house prices in New South Wales. The fresh data was out today from CoreLogic, their home value index. Uh here's their head of research, Eliza Owen. Welcome back, Eliza. So is this month twenty one for New South Wales?
Yeah, good to be here, Phil. Uh so no, uh the results for October sh show that the growth streak in Sydney has been broken. After twenty consecutive months of increase, values were down a point one percent in the month, and that was driven by a decline in houses. I think it's really at a point now where a lot of the cost of living pressures, borrowing capacity constraints, and lower savings rates to put towards a deposit are finally dragging on demand in the Sydney housing market, especially in response to a pretty bumper spring selling season where you've got more supply coming online for sale. And Sydney is the fourth capital city this month to see a decline, um, alongside Melbourne, Darwin and Canberra.
So uh at the So what they've
all just moved to Brisbane instead?
Yeah. So Brisbane, even Brisbane is showing a slowdown in growth against affordability constraints. The point seven percent growth rate across Brisbane over the month is the lowest result we've seen since July. Uh and even in cities like Adelaide and Perth, which are the strongest performing, Adelaide up one point one, the slowest monthly growth rate uh since June. And Perth sitting at one point four percent over the month, still a very good growth rate. But it's it's slowed since earlier in the year as well.
So have we peaked then? Because it seems you know, it has seemed like when interest rates are low, house prices go up, interest rates are high, fewer people sell, so there's less housing stock, so prices go up because there's more competition. Uh but it ha has that pattern been broken then? I mean it's just one month, obviously.
Well, I think that usually when interest rates rise, you should see asset prices come down. So the housing market has been quite surprising and defying the lift in interest rates really recovering since the start of twenty twenty three. In fact, it was when we got the last rate rise in November last year that coincided with a fresh record high in national home values. So I think what we're seeing now makes a bit more sense. High interest rates, limited borrowing capacity, cost of living pressures, and affordability constraints should be taking buyers out of the market. At a high level, national home values were still up.
Why did Sydney’s 20‑month home‑price growth streak end in October?
three percent in October, but the pace of increase has been slowing down and that's what I would have expected to see. Um and yeah, it's kind of been seeing the scales tip in slow motion, I guess, with the gradual decline in the pace of home value increases.
But if we if we reach the point now where it's slowed or stopped or even we start to get small declines, that is presumably when people start to say, Well, okay, we're not going to sell now. So we start to see less housing stock and yet it looks like I mean auctions last weekend were pretty good, weren't they? Three thousand auctions, a lot in Melbourne. But are those auctions clearing, I guess is the question.
Yeah, so on the supply side you would see a more gradual reaction to uh fall or a deterioration in seller conditions. The housing market, remember, is a pretty slow-moving asset in that sense. But you're right, eventually, cyclically you'd expect to see more people taking their property off the market. Last week was a pretty bumper week for auction volumes, but that was partly because we've got Melbourne Cup Day coming up.
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Chapters
8 chapters
1
What is driving the recent changes in Australian house prices?
0:01–2:58
2
Why did Sydney’s 20‑month home‑price growth streak end in October?
2:58–7:00
3
How are other capital cities like Melbourne, Brisbane and Darwin experiencing price declines?
7:00–10:29
4
What impact are rising construction costs and wages having on housing supply?
10:29–13:53
5
Are affordability constraints slowing national home‑value growth despite high interest rates?
13:53–17:34
6
What do recent auction volumes and clearance rates indicate about buyer versus seller market dynamics?
17:34–20:20
7
Why is Queensland seeing record‑high housing loan commitments and what does it mean for price growth?
20:20–23:42
8
How is the normalization of overseas migration affecting housing demand and rent growth?
23:42–25:54