Knowing when to buy in the housing game can seem a little bit like a lottery when property prices just keep going up, but it’s important to remember that old saying ‘what goes up must come down’. And we’re starting to see some signs of a slowdown in the market, which reached record-breaking levels in 2020. In fact, you’d have to cast your mind back to 2004, a year when Shannon Noll’s version of the classic ‘What About Me?’ was dominating the airwaves to find a time when house price growth was faster than it has recently been. The latest data is pointing to signs that the auspicious run is starting to slow down. Looking back, it’s clear to see that while sellers collected their share, it left buyers asking themselves the same question Nollsy was pondering all those years ago. Over the past year, home values increased by 16.1% which was the fastest pace of growth since 2004, according to CoreLogic’s latest Hedonic Home Value Index. SLOW MOVING TRAFFIC AHEAD: CoreLogic Research Director Tim Lawless said that while the market is still powering on (up 1.6% in July) there are signs of a slowdown. “The monthly growth rate has been trending lower since March this year when the national index rose 2.8%,” Mr Lawless reported. PROCEED WITH CAUTION: There may be more bumps ahead, too, with the value of new housing loan commitments dropping 1.6% in June, the first decline in monthly lending figures in 2021, according to the latest Australian Bureau of Statistics figures. WHAT’S CAUSING THE TRAFFIC JAM? Mr Lawless explains that dwelling values increasing greater in a month than incomes are rising in a year, the ‘Great Australian Dream’ of home ownership is simply moving out of reach for members of the community. In addition, the winding back of some COVID-19 support payments, including JobKeeper and HomeBuilder, have been a factor. CoreLogic’s latest Hedonic Home Value Index report noted that the pandemic itself has been a complicating factor.

“It is likely recent COVID outbreaks and associated lockdowns have contributed to some of the loss of momentum as well, particularly from a transactional perspective in Sydney which is enduring an extended period of restrictions”  – CoreLogic’s latest Hedonic Home Value Index report

It should be noted, however, that housing values are continuing to increase substantially faster than average. In fact, according to CoreLogic, the average pace of monthly dwelling value appreciation has been just 0.4% over the past decade. THE ROAD AHEAD: The rapid growth rate is predicted to slow as 2021 draws to a close and affordability plays a greater factor and housing supply gradually lifts, CoreLogic reports. “Other potential headwinds are apparent, including the possibility of tighter credit policies”. On the other hand, demand remains strong, assisted by record-low mortgage rates and the prospect that interest rates will remain low for some time to come. “A lift in the cash rate is likely to be at least 18 months away,” CoreLogic adds. “The recent spate of lockdowns is likely to see Australia’s economy once again contract through the September quarter, a factor that is likely to keep rates on hold for a while longer.” LET’S DRIVE! With house prices having just experienced their fastest pace of growth in almost 20 years, it’s as important as ever to purchase your new home with a finance option that’s right for you. If you’re a prospective homebuyer who wants to explore what options are available to you – including your borrowing capacity – get in touch today. We look forward to showing how we can help!