Australia's housing prices extend modest gains in January
AUSTRALIAN home prices extended gains in the first month of the year, but growth in Sydney and Melbourne almost flattened as worsening affordability and high borrowing costs took some heat off the market during a quiet period.
Figures from property consultant CoreLogic showed prices nationally rose by a muted 0.4 per cent in January, compared with 0.3 per cent in December. They jumped 8.1 per cent in 2023, defying crash expectations, as a resurgence in migration added to demand amid tight supply.
However, growth has slowed in recent months, with Sydney prices just rising 0.2 per cent in January while Melbourne recorded a 0.1 per cent drop. Perth, Brisbane and Adelaide, however, registered gains of more than 1 per cent.
To be sure, selling activity usually slows in January due to the year-end holidays and is expected to pick up in February.
“The housing market has started the year on a similar footing to where it left 2023 with values generally trending higher, albeit with significant diversity across the regions and housing types,” said CoreLogic.
The small gains are likely to be welcomed by the Reserve Bank of Australia, which had worried that the rapid revival in prices would boost household wealth and stoke spending power even as the central bank is trying to put a lid on consumption.
Policymakers have jacked up interest rates by a whopping 425 basis points since May 2022, but the recent slowdown in inflation, soft consumer spending and a loosening job market meant interest rates have peaked and cuts could be on the way.
CoreLogic noted that easing inflation and rate cuts could buoy consumer sentiment and boost buying, but still high borrowing costs, tight macro-prudential settings and changing migration patterns can cap some of the gains in the market this year. REUTERS
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