APRA's move won't stop 2017 price growth says SQM as listing, prices rise in March

APRA's move won't stop 2017 price growth says SQM as listing, prices rise in March
APRA's move won't stop 2017 price growth says SQM as listing, prices rise in March

Figures released by SQM Research reveal national residential listings increased 4.4 percent to 351,509 over the month of March 2017.

The data reveals Sydney and Melbourne posted the biggest monthly rises in listings, up 11.0 percent and 9.1 percent, respectively, as vendors seek to take advantage of big price gains in those two cities.

In all other cities, listings rose over the month.

In Brisbane, listings were up a healthy 6 percent, and in Perth they rose 4.9 percent, followed by Canberra, where stock levels rose 4.8 percent.

Over the year, listings were up in most capital cities, led by gains of 12.6 percent in Perth, followed by Canberra and Sydney, where stock levels were up by almost 12 percent from a year earlier.

Louis Christopher, the Managing Director of SQM Research, said the big rise in listings in Sydney and Melbourne reflects the fact that many property owners are attempting to cash in on rapid price growth in recent times.

“House asking prices are still rising quickly in the nation’s two biggest cities," he said.

"Despite new measures by Australian Prudential Regulation Authority (APRA) to restrict interest-only mortgage lending, these measures are weak in the face of the strong price momentum in Sydney and Melbourne, fed by low interest rates and robust population growth."

SQM Research is predicting Sydney prices will rise between 11 percent and 16 percent in 2017, while Melbourne gains will be between 10 percent to 15 percent.

While those forecasts were made in November 2016, they had taken into account a potential tightening by APRA.

“APRA's move is not aggressive enough for SQM to revise its predictions. We still expect strong price growth,” he said.

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APRA's move won't stop 2017 price growth says SQM as listing, prices rise in March

APRA has asked banks to limit interest-only mortgage lending to 30 percent of all home loans written.

As part of this, the regulator has demanded banks strictly limit the volume of interest-only lending at loan-to-value ratios (LVRs) above 80 percent and also ensure there is strong scrutiny and justification of any instances of interest-only lending at LVRs above 90 percent.

“However, these measures are weak and are not going to be enough to slow down the Sydney and Melbourne housing booms, where both owner occupiers and investors are feeding demand,” Mr Christopher said.

SQM Research data for house asking prices over the three months to April 4 shows that asking house prices grew the most in Melbourne, Canberra and Hobart, with prices up 7.2 percent, 6.8 percent and 6.4 percent respectively.

In Sydney, asking house prices rose 4.5 percent.

That compares to a 2 percent rise in Adelaide, 1.1 percent rise in Brisbane and a fall of 2.4 percent in Darwin and 2.2 percent in Perth.

 

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Sydney Sqm Research

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