Australian Home Prices Update

SYDNEY (Reuters) – Overall home prices in Australia rose for an 18th straight month in July, but three capital cities recorded a decline, indicating the housing market rally is slowing.

Figures from property consultant CoreLogic, released on Thursday, showed prices across the nation climbed 0.5% in July, up from unchanged in June. Prices have continued to hit record highs since bottoming out early last year, with an increase of 7.6% from a year ago.

The monthly increase was driven by a 2.0% jump in Perth and a 1.8% gain in Adelaide. However, prices in Melbourne, Darwin, and Hobart—three of the eight state and territory capital cities—decreased by 0.2% to 0.5%.

On a rolling quarterly basis, prices for Melbourne fell 0.9%, while gains for Sydney also slowed to 1.1%, down from 5.0% in the same period last year.

“While the headline growth rate remains positive, it is clear momentum is leaving the cycle and conditions are becoming more diverse,” said CoreLogic in their release.

The Reserve Bank of Australia has raised interest rates by 425 basis points since May 2022 to tame inflation, yet the gains in the real estate market have defied expectations, aided by record immigration and limited housing supply.

Markets are pricing in a 70% probability of an easing in interest rates by the end of the year following data showing a slowdown in core inflation.