Australian Home Prices Teeter On A High Cliff...

Well, there should be no surprise that home price growth is easing, and indeed prices are falling in some places up to the end of the year, as a combination of higher for longer interest rates, broader financial pressures, reduced borrowing capacity and even easing migration are all taking their toll. This despite assurances from Clare O’Neil that prices would not drop.

NOTE: After the show was published I received the following statement from Ben Ansell Media Director to Minister Clare O'Neil: "There is a line in your blog post which is false and misleading anything that Minister Clare O'Neil has said. "This despite assurances from Clare O’Neil that prices would not drop." If you are referring to her interview on Triple J. Her comments were to the effect that "it's the position of the government that we don't want to see housing prices go down." At no point has she made assurances on whether house prices will increase or decrease. It would be much appreciated if you could fix that".

The reality is that gravity is finally catching up with the market. Many observers expected home prices to fall in response to the Reserve Bank of Australia’s (RBA) aggressive interest rate hikes, which made property significantly more expensive. However, prices defied gravity and increased due to record net overseas migration and acute stock shortages. But as a result, Australian property values have decoupled from borrowing capacity, resulting in historically low affordability. Realistically, home prices will continue to fall until the RBA cuts interest rates, increasing affordability and borrowing capacity. But even then, growth will be anemic at best, This is consistent with our three scenarios and our base case as reported in recent months.

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[ayfj]

Even if Aus House prices fall 50% or more, they will still be too expensive for proper legal Aussie home grown buyers. Expect both lowlife sides of government to pull out all the stops to keep the game going. Remember Rudd saying anyone in the world can buy In 2008 during the GFC. The UniParty job is not to allow any RE price decrease.I despise our political elite.

[vladtherd]

Australians are starting to get what they deserve for voting for the same parties and same policies for all these years

[Deano]

30 years of house price growth in 4 years is not sustainable. There’s going to be a lot of pain ahead for some.

[wmichaelshiberrassw]

Wishful thinking that house prices will crash, they should but they always find a way to keep them high or rising, disgusting, Martin your facts and figures now and in the past logically calculated that house prices should have fallen years ago but we are not dealing with rational or logical politicians or investors, we have no industries left for prosperity, we only have the housing market

[CondemnedInformer]

Ban immigrants from buying homes, ban people buying more than 2 homes, one for living in and one for renting out at max. Hopefully the prices crash at the very least. I care about the couple that finally got their first home after saving for a decade, I don't care though about the migrant or the wealthy traitor that owns multiple homes, sorry 'assets'.

[ChrisAlexander-ye]

In the mid 1970's, the median house price in Melbourne was $30, 000. Today, people are spending $90, 000 on a bathroom renovation. Is this progress or madness? It's progress for the financial institutions and madness for the masses.

[frankwren]

Housing price bubble will definitely pop within the next decade.
Govt will try to prop it up with more foreign ownership, but sooner or later, the political will is going to manifest to curb or even ban foreign ownership, and prices will plummet to the lowest in decades.

[BammBamm]

I’ve been closely following the housing bubble since 2012. Never before have I seen so many (young) people give up on housing and their future than currently. The comments on places like reddit are complete hopelessness and giving up on any kind of future. What’s the point of working if they are just scraping by let alone any chance of saving to buy a home. Something is going to give in Australia and it’s not going to be pretty.

[merlingeikie]

Interest rate cuts = higher longer inflation

[addictiveaussie]

Rates are going UP, not DOWN. The US Fed have lost control of the yield curve, notice that US 10 year yield., the most important arbiter of global rates, has gone nothing but up since the Fed began lowering?
The US are headed toward default before Trump's term ends, and the US national debt will hit well over $51 Trillion, so who will will buy their debt at single figures return? NOBODY!
The belief that central banks can control the long end is garbage, they can only control the short end and only then, as long as inflation behaves. Well, inflation Rnd 2 is underway. Property globally is going to be a nightmare, in Australia it is going to bankrupt the nation and bank "bail-in's" are coming, and I keep warning people collapse of the AUD also and that you need to hold gold. Gold broke out of a 'double-top' in AUD in NY overnight, and is headed to $4800 in short order. It will hit $6000 before the end of 2025

[fatwombat]

I own a house but the price is irrelevant as I live in it. The pain of house price drops is the price we have to pay for creating a Ponzi in the first place and the good of society in general.

[xiaopo]

The only way to bring the house prices down is people's power rally before next election.

[michaelbananas]

Houses have barely risen in the last decade in US dollar terms.

We pretty much have no room left to bleed our currency. Uh oh!

[DMC]

Happy new year Martin
Hopefully you and your canine companions have a great year
Keep up the great work

[richarddobosz]

Congratulations great presentation thank you

[Diplonomads]

Who owns corelogic??? Who funds corelogic???

[trojanhatchet]

Govt will do something to stop a fall they always do

[John]

Unfortunately the “tradesman ship “ has been produced for people who will never view the end product or live in it. So the quality has shifted badly.

[laszlon.]

Great work Martin, the market can stay irrational longer than you can stay solvent.

[briannewman]

Will there be rate cuts if the Australian dollar continues to fall in value?