Australian house prices still solid despite regulation: ANZ's Daniel Gradwell
Australian dwelling prices rose by a moderate 0.8% m/m in seasonally adjusted terms in July, which was the strongest monthly result since February.
The market remains healthy despite tighter regulation and higher borrowing costs, although auction results do point toward a further cooling in the market in coming months.
APRA’s macroprudential regulation and the subsequent increases in borrowing costs (primarily for investors) have been felt in the market, with annual dwelling price growth slowing to 10.4% y/y, down from the 13% peak earlier in the year.
Interestingly, Sydney prices have slowed markedly, but Melbourne prices have been more resilient and are still 16% higher than a year ago.
As we noted in this morning’s Canadian housing insight, British Columbia’s experience suggests that regulation can indeed slow the housing market, but questions remain over the sustainability of such movements.
Subsequent tightening in Ontario has also had a negative impact on prices in recent months, and we will be watching closely to see if these moves become permanent.
In Australia, weaker auction results in recent months suggest that price growth will continue to ease, especially in Sydney.
But there is no suggestion that prices will materially fall, as per Canada.
Yesterday’s private credit data showed that while investor credit growth has slowed in response to the regulatory changes, there has been an improvement in owner-occupier borrowing.
This suggests that overall sentiment in Australia’s property market remains positive.
Daniel Gradwell is the senior economist for ANZ.