​The Australian Housing Market is Exhibiting Signs of Deceleration

Conor's Corner

"The property market has been undergoing a correction since June 2024. While short-term fluctuations driven by FOMO and headline interest rate cuts may create temporary upswings, the overall trend remains downward. A high level of household leverage, combined with increasing supply from distressed mortgage holders, is likely to sustain this downward pressure. The effects of pandemic-era stimulus on the housing market are now beginning to unwind, leading to a more balanced, albeit challenging, market environment."

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​The Australian housing market is exhibiting signs of deceleration following the Reserve Bank of Australia's (RBA) 0.25% interest rate cut in February. Recent data indicates a decline in auction clearance rates and a plateau in dwelling values across major cities, suggesting that the initial stimulus from the rate cut may be waning.​

Auction Clearance Rates Decline

Over the weekend, the preliminary auction clearance rate dropped to 66.1%, marking the lowest point since the week prior to the February rate cut, which recorded a 65.0% clearance rate. This trend is particularly evident in Melbourne and Sydney:​

• Melbourne: The preliminary clearance rate fell to 67.2%, a 3.3-percentage-point decrease from the previous week.​

• Sydney: The rate dipped to 65.5%, continuing a downward trend from the recent high of 76.6% observed during the week ending February 16. This represents the lowest clearance rate since December 15, 2024, which recorded a 63.0% rate.​

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Stagnation in Dwelling Values

In addition to declining clearance rates, CoreLogic's daily dwelling values index indicates a stall in price growth across Sydney, Melbourne, and the combined five-city aggregate. This stagnation suggests that the housing market's recovery momentum is slowing, despite the earlier boost from the February rate cut.​The Guardian

Anticipation of Further Rate Cuts

The current market conditions have led to speculation about the necessity of additional monetary policy interventions. Many economists anticipate that the RBA will implement another 0.25% rate cut in mid-May, following the federal election scheduled for May 3. Such a move is expected to provide further stimulus to the housing market, potentially leading to a post-election rebound.​

As the market awaits the RBA's next decision, stakeholders remain cautiously optimistic that additional rate cuts will reinvigorate housing activity and address the current slowdown.