Australian house prices finished 2015 on a whimper: ANZ Research
The housing market concluded 2015 with a whimper, with national house prices falling again at the national level in December. However, strong price growth in the first half of the year meant that prices were still up solidly over the past year.
But the current environment of subdued demand is likely to see price growth remain sluggish as we move into 2016.
Prices fell across the key markets of Sydney and Melbourne in December in seasonally adjusted terms. Prices in Sydney have now fallen for three consecutive months – the first such run in nearly five years.
Prices are being driven by softer demand and sentiment in the housing sector. Tighter regulation and higher interest rates have contributed to auction clearance rates falling from their recent peak. As clearance rates dipped further in December, to a three-year low in Sydney, house prices have been correspondingly soft (Figure 1).
Falling prices were prevalent across most of the smaller capitals too in December. However, one brighter spot was Brisbane, which experienced rising prices over the past two months. This is consistent with our belief that Queensland’s economy has turned the corner, supporting housing sentiment. In addition, the absence of earlier price growth to the extent of Sydney or Melbourne means that there is less room for unwinding over the near term (Figure 2).
Cherelle Murphy is co-head of Australian economics, ANZ and Daniel Gradwell is economist. They can be contacted here.