No change of trend for home prices in October : - still regular increase for all 5 capital cities, - like in August and September, October is on a trend of + 0.9 % to + 1 % for the month. No surprise to see that price increase is more limited in Melbourne, given all the measures taken against the landlords there. By the end of the month, home prices in Australia should be be close to previous peak*.
While prices have initially been driven by the high end market, it is now driven by the lowest quartile and the 3 more affordable capital cities (Perth, Adelaide and Brisbane) during the last quarter (where supply is also the weakest).
Still a bit surprising to see that houses prices continue to outperform unit prices overall for 5 capital cities aggregate, both mom and yoy, despite the large price difference between houses and units. Probably, the last leg of price increase will be for units vs houses, as the market will look for the remaining part which will looks affordable*.
Going forward, it will probably take a long time to solve the issue of new supply. But more supply of existing dwellings could come on the market, as we have seen it during the last couple of months. However, it was limited, as it was mainly coming from investors who were selling. Still no obvious signs that owner occupiers are selling, for good reasons (few opportunities to rent or buy another home).
The 2 main indicators for me regarding the housing market : - the level of distressed selling which remains limited : + 1.3 % mom (in Oct) and - 16.7 % yoy (according to SQM Research), - and the level of unemployment, as a major indicator of the ability to serve mortgages. There is also no major deterioration there.
* at the end of October, home value remains 1.3 % below previous peak (in Apr 22). ** nationally, there is now a price difference of 28 % between houses and units, but this difference is 41 % if we look only at the capital cities (source : Corelogic in Oct 23).
