Borrowing, not borrowers, forcing housing market slowdown

Borrowing, not borrowers, forcing housing market slowdown

Experts have warned that unnecessarily tough borrowing rules, not a lack of borrowers, were forcing housing markets to slow — including Brisbane for the first time since 2012.

CoreLogic research analyst Cameron Kusher this morning tweeted his frustration at the forced slowdown which he believes was linked more to borrowing than a lack of borrowers.

“Whether it be capital city or regional markets, housing market conditions have slowed pretty much across the board over the past year. You won’t convince me it is less demand everywhere, finance is harder to access and it is causing a slowing across the board.,” he tweeted.

The CoreLogic February Home Value Index, out Friday, showed that a 0.7 per cent decline in national dwelling values over the month, with Brisbane logging its first negative annual result in seven years (-0.5 per cent).

Since the last national market peak (October 2017), values have gone backwards 6.8 per cent, putting them back in line with September 2016.


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CoreLogic head of research Tim Lawless warned that “the February results remain overall weak, with the geographic scope of negative conditions broadening”.

“The fact that we are seeing weakening housing market conditions across regions where home values were previously rising at a sustainable pace and economic conditions are relatively healthy is a sign that tighter credit conditions are having a broad dampening effect on buyer activity,” he warned.

Only three Australian capitals saw values rise over the past twelve months — Hobart 7.2 per cent, Canberra 3.4 per cent and Adelaide 1 per cent.

“Brisbane (-0.5 per cent) now shows a negative annual change for the first time since 2012 and Sydney’s housing market moved into double digit annual declines for the first time since the early 1980s,” Mr Lawless said.

“If Melbourne’s downturn continues at a similar pace we are likely to see the annual decline move into double digit falls over the coming months as well, with values currently 9.1 per cent lower over the year.”

Mr Lawless did acknowledge other factors impacting the housing climate — not just credit availability — including higher levels of supply, a build up of stock available for sale, fewer foreign buyers, and reduced sentiment.

He said the residential sector had gone through “unprecedented peaks, with new housing supply now weighing on some markets”, but these were “confined to specific high-density precincts, and to a lesser extent, some greenfield detached housing markets”.

He said it was definitely now a buyers market.

“The number of properties advertised for sale has been consistently rising due to fewer buyers and longer selling times. Despite the surge in inventory, ‘fresh’ stock being added to the market was down 19 per cent relative to last year, highlighting that vendor confidence is low. Buyers are firmly in the driver’s seat and in a good position to take advantage of the strong buying position.”

Mr Lawless said a rate cut might be on the cards now, especially if needed to counter the loss of wealth households might be feeling from housing values dropping.

“Further cuts to the cash rate are looking like a growing possibility,” he said.

“If households reduce their spending as the wealth effect continues to reverse, then interest rate cuts or other policy intervention could become more likely.”


Sydney -10.4% to $789,339

Melbourne -9.1% to $629,457

Brisbane -0.5% to $490,635

Adelaide 1% to $432,946

Perth -6.9% to $438,952

Hobart 7.2% to $457,186

Darwin -5.3% to $397,867

Canberra 3.4% to $594,351

Combined capitals -7.6% to $599,612

Combined regional -1.4% to $374,929

National -6.3% to $524,478

(Source: CoreLogic)


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