Australia's house prices up faster on sentiment lift
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AUSTRALIAN home prices rose at a faster pace in February, helped by rebounding consumer sentiment as inflation eases and rate cut hopes build, though affordability issues, a slowing economy and strict lending conditions are likely to keep a lid on growth.
Figures from property consultant CoreLogic out on Friday (Feb 23) showed prices nationally climbed by 0.6 per cent in February, the strongest monthly gain since October and picking up from a 0.4 per cent increase the month before.
They jumped 8.1 per cent in 2023 to reclaim the previous peak, defying interest rate hikes.
The monthly increase has been driven by a solid 1.8 per cent jump in Perth and a 1.1 per cent gain in Adelaide, while price growth in Sydney and Melbourne, which flatlined the previous month, picked up to 0.5 per cent and 0.1 per cent respectively.
“Potentially we are seeing some early signs of a boost to housing confidence as inflation eases and expectations for a rate cut, or cuts, later this year firm up,” said CoreLogic’s research director Tim Lawless.
Lawless said the auction results – with clearance rates hitting the high 60 per cent in February – and consumer sentiment, which rebounded to a 20-month high last month, have a historically strong relationship with housing trends.
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“However, it’s hard to see a significant rebound in values shaping up... Affordability constraints, rising unemployment, a slowdown in the rate of household savings and a cautious lending environment, are all factors likely to keep a lid on value growth over the near term.”
A Reuters poll of analysts showed prices are forecast to gain 5.0 per cent this year.
The Reserve Bank of Australia has raised interest rates by 425 basis points since May 2022 to a 12-year high of 4.35 per cent, but as inflation falls and the labour market loosens, markets are certain rates will not be any higher.
Futures have wagered a rate cut could come as early as in August, with a more than 70 per cent probability. However, they only see a modest easing of 43 basis points this year. REUTERS
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