The housing downturn in Australia continued into November but slowed down, which suggests the real estate market is starting to respond to rising borrowing costs and even the possibility of future interest rate hikes.
Sydney, the bellwether market, where prices fell 1.3% for a 10th consecutive monthly decline, was mostly to blame for the slowdown in the rate of correction, according to a data released on Thursday by CoreLogic Inc. The national index, which incorporates regional markets, experienced its smallest decrease since June in November, down 1%.
The numbers indicate that despite the greatest monetary tightening cycle in a generation, the A$9.7 trillion ($6.5 trillion) property market is holding up fairly well. Since May, the Reserve Bank has increased interest rates by 2.75 percentage points, bringing them to 2.85%.
According to Tim Lawless, research director at CoreLogic, “perhaps we are seeing the initial concern over buying in a higher interest rate environment wearing off.” However, it’s accurate to state that housing risk is still heavily weighted to the negative as long as interest rates continue to rise and household balance sheets continue to deteriorate.
A top RBA official voiced optimism in the Australian property market on Wednesday, noting that prices are still 20% higher than they were at the start of the epidemic. Additionally, as unemployment is at its lowest point in nearly 50 years, borrowers are in a good position to make their obligations, and loan arrears are expected to be kept to a minimum.
“Perhaps we are seeing the initial apprehension over buying in a higher interest rate environment wearing off,” says Tim Lawless, research director at CoreLogic. As long as interest rates keep rising and household balance sheets keep getting worse, it is true to say that housing risk is still significantly skewed in the wrong direction.
On Wednesday, a senior RBA official expressed optimism about the Australian real estate market, noting that prices are still 20% higher than they were before the pandemic. Borrowers are also in a good position to meet their obligations because unemployment is at its lowest level in almost 50 years, and …