AUSTRALIA’S housing market is again showing signs of slowing momentum over August and September, with further declines tipped for Melbourne, ANZ has forecast.
According to ANZ Research, while capital city housing prices continued to expand over September, at 0.5% average monthly growth was down to 0.4%, down from 0.6% month-on-month in Q2.
Which is also well down on the average housing price growth from this time last year, when it was 0.9% month-on-month.
Over September, Perth and Adelaide continued to dominate gains, both rising above the 1% mark, while prices in Melbourne were down 0.4%, with prices also dropping in Hobart and Canberra.
So far this year, Perth has seen 17.6% price growth in 2024 compared to Melbourne’s six consecutive months of declines for a fall of 1.5% so far this year.
This has resulted in Melbourne dwelling prices still sitting under their 2022 peak, while Perth, Adelaide and Sydney prices continue to mount to new highs.
ANZ is still forecasting capital city housing prices to rise 7.3% over 2024, before 2025 sees the pace of growth drop down to 5.5%.
Perth housing prices are forecast for a 25.1% increase, while Brisbane and Adelaide prices anticipated to see a 15% lift over 2024.
ANZ predicts Melbourne house prices will decline over the year, with a 1.7% drop. With Hobart also anticipated to record a fall over 2024.
Auction results also indicate waning energy in the housing market, with auction clearance rates “sluggish”, with CoreLogic’s preliminary figures for last week showing the clearance rate at 64.5%, the lowest preliminary rate since December 2022.
New listings are also sitting around 25% up on the five-year average and 10% above the 10-year average. However, total listings are still sitting at 14-year lows when excluding pandemic results.
In Victoria and NSW, dwelling stock is now exceeding population growth, with Victoria’s dwelling stock up 7.8% compared to 5.2% population growth between March 2020 and 2024.
ANZ is also saying the much talked about population boom has now passed its peak and should slowly continue to ease, particularly with moderated international student intake, in part due to the federal government’s 2025 cap.
This should be mostly felt throughout the rental market, with over 80% of new arrivals to the country renting.
Advertised rents across the capital cities have risen 38.5% since the end of 2019, with Perth seeing a massive 64% growth over this period.
With rental affordability still declining and the proportion of income required to service rental rates has rising to 33.0% nationally, which is comfortably in the range classified as rental stress.
This comes as ABS lending figures showed the pace of lending excluding refinancing was also allowing in August, at 1.0% for the month after July’s 3.5% increase.
The August boost was driven by investor lending which was up 1.4% for the month an 34.2% annually.
With lending seeing the strongest gains in Queensland where it was up 41.0% in the year to August, with investor lending also the strongest, up 58.5% for the year.
Luckily 79% of mortgage customers still remain ahead of their repayments, with around 30% more than two years ahead, according to internal ANZ data.
Though 37% of ANZ home loans that are being paid on time or less than one month ahead are held by investors.
Currently, less than 2% of variable-rate owner-occupiers are at risk of falling behind on repayments, just 0.2% of variable-rate owner-occupiers at risk of falling behind on repayments and in negative equity.
At the same time, the proportion of income required to service a new mortgage is at a record high of 50.3% for dwellings and 54.5% for houses, according to the latest ANZ-CoreLogic Affordability Report.
With the number of years it takes to save for a dwelling at 10.6-years and 11.5 years houses.
PropTrack’s latest Housing Affordability Report saw a median-income household earning around $112,000 could afford just 14% of homes sold in the 2024 financial year, the smallest share of homes since records began in 1995.
Building approvals were also slowing in August, at 6.1% for the month after a more dramatic bump of 11.0% in July. Thanks to a drop of 16.5% in private unit approvals, compared to a 0.5% increase for house approvals.
