Australia's housing market advanced for a 13th straight month, even as signs mounted of a potential cooling ahead in response to worsening affordability, increased supply and the withdrawal of government support.
Residential property values in Australia's major cities rose 1.4 per cent in October, to be up almost 21 per cent from a year earlier, according to CoreLogic Inc. data released Monday. House prices are outpacing wages by a "ratio of about 12:1," it said.
"This is one of the reasons why first home buyers are becoming a progressively smaller component of housing demand," said Tim Lawless, research director at CoreLogic. In addition, "new listings have surged by 47 per cent since the recent low in September and housing focused stimulus such as HomeBuilder and stamp duty concessions have now expired," he said.
Property gains have been underpinned by ultra-low interest rates, raising concerns about financial stability risks and prompting the nation's banking regulator to tighten lending rules. Economists expect further efforts to slow credit given prices in Sydney, one of the strongest markets, have surged 25 per cent over the past year.
"As housing becomes less affordable, we expect to see more demand deflected towards the higher density sectors of the market, especially in Sydney where the gap between the median house and unit value is now close to A$500,000," Lawless said.
"It's highly likely the housing market will continue to gradually lose momentum," he added. - Bloomberg