(Bloomberg) —
Australia’s housing boom appears to be over, with growth poised to fall as low as 5% this year, after a 22.1% rise in 2021.
A softening housing market cooled further in December, rising just 1% nationally as the boom in high-end properties that has underpinned the record run tapered significantly, according to data released by CoreLogic Inc. Tuesday.
Melbourne, Australia’s second most-populous capital city, reported its first price decline since October 2020, slipping 0.1% in December, the data show. Sydney also posted its slowest month since then, recording an increase of just 0.3%. The upper end of the housing market which led the boom is now leading the slowdown, with prices up 2.6% in December, compared with a 3.7% rise in cheaper houses, the data show.
“A surge in freshly advertised listings through December has been a key factor in taking some heat out of the Melbourne and Sydney housing markets, along with some demand headwinds caused by significant affordability constraints and negative interstate migration,” according to Tim Lawless, research director at CoreLogic.
Lawless is predicting a “sharp slowdown” in the market this year, with growth at 5-7%. He said the mismatch between stock levels and demand was a driving factor of the buoyant market in 2021 but as things “normalize and affordability constraints along with tighter credit conditions drag down demand, it’s reasonable to expect growth conditions will be more subdued in 2022.”
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