The Australian real estate market is turning the corner back to positive growth following a long downturn following tax measures against overseas property investors in many states.
Australian real estate prices stabilised in July as the hard-hit markets of Sydney and Melbourne enjoyed a second straight month of gains and sales at auctions picked up markedly, an early sign that rate cuts were feeding through.
Data from property consultant CoreLogic out on Thursday showed Australian real estate prices across the capital cities rose 0.1 per cent last month, breaking almost two years of relentless losses.
Property prices outside the major cities still dipped slightly in July, so that nationally values were unchanged.
Australian real estate values in both Sydney and Melbourne edged up 0.2 per cent in July, a major turnaround if sustained. Prices in Sydney have been falling since mid-2017 and are down around 15 per cent from their peaks.
The improvement also reflected a revival in clearance rates at property auctions, a popular method of sale in Australia’s major cities, with Sydney topping 70 per cent in recent weeks.
The turnaround will be a relief to the Reserve Bank of Australia (RBA), which cut interest rates in both June and July taking them to an all-time low of just 1 per cent. They also loosened rules on home loans, which effectively allowed prospective buyers to borrow more, aiming to boost the market.
CoreLogic head of research, Tim Lawless, said: ‘The stabilisation in housing values is becoming more broadly based, with five of the eight capital cities recording a subtle rise in values over the month.’
Economists agreed, with UBS economist George Tharenou noting to customers: ‘July officially marks the end of the longest and deepest house price correction in Australian history. While prices and sentiment have clearly turned, we remain cautious and do not expect a V-shaped recovery.’