• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Business Report
    • 20 Top Research Organisations
    • Tobacco Laws
  • Takeovers & Mergers
  • Doing Business
    • Start-up
    • Tax Review
  • Video
  • Biz Directory
    • Free Directory Listing
    • Links
  • Guest Post
  • Contact
    • About

Australian Business News and Times

Business News ,Reports and Times of Australia

  • 2011
    • 2010
  • Business
    • Small Business
  • Mining
  • Real Estate
  • Australia
    • Australian
    • ASX
  • Finance
    • Report
  • Offers
  • Times
You are here: Home / 2012 / 2013 / Housing price growth in Australia is over

Housing price growth in Australia is over

May 1, 2013 by Reporter Leave a Comment

Price rises in the Australian housing market have slowed, according to new reports, and they won’t show any signs of picking up again in the near future.

home loans and mortgage

In an important speech to the Citibank Property Conference in Sydney last week, the Australian Reserve Bank’s head of financial stability Luci Ellis said that home prices in Australia are likely to grow more slowly than they have for the past 30 years.

She stated that “trend housing price growth will be slower in future than in the previous 30 years”, and is unlikely to rise rapidly again.

House prices are definitely rising – but not “booming”

 

These new statements from the Reserve Bank come just a month after the latest RP Data-“Rismark Home Value Index” showed that capital city house prices rose by 2.8 per cent on average in the March quarter of 2013 – the strongest quarterly result in almost three years. According to The Australian, this slow rise can also be seen in both the Australian Bureau of Statistics’ established house price index, which rose by 2.1 per cent, and its consumer price index, which rose by 2.2 per cent throughout 2012.

However, RP Data research director Tim Lawless admitted that we are unlikely to see such growth rates continue throughout the year, with growth likely to normalise over the coming months.

What’s to blame for the slowdown in housing price growth?

 

In the late 1990s and early 2000s, the low-inflation targets imposed by the RBA meant that consumers could borrow around twice as much as they previously had been able to. This in turn contributed to the huge rise in home prices and housing price problems in australia  that was observed during this period, both in absolute terms and relative to consumer income.

However, now that this inflation-targeting period is over, housing prices are believed to have leveled off to a “new normal”, according to Dr Ellis.

What does this mean for potential homebuyers or investors?

 

Those scoping out new home loans for a home or investment property may be wondering what this latest news means for them, and the answer may not be such a positive one. In her speech, Dr Ellis suggested that these slower growth trends in housing prices meant that total returns on rental properties would fall, and that today’s homebuyers would most likely not receive the same capital gain on the family house as the previous generation did.

The Reserve Bank also warned that a slow housing market may see more periods where house prices actually fall, meaning that both purchasers and financial institutions should be cautious of borrowing or loaning a high percentage of the purchase price of a new home. This is so borrowers can try to avoid a situation in which their outstanding loan is larger than the actual value of their home – or what’s known as negative equity. The RBA is also opposed to banks lowering their lending standards to try and incentivise borrowers and boost loan growth and profits.

 

While a downturn is possible, there’s a low possibility of a property price crash

 

Those worried about the property market ‘crashing’ shouldn’t be – it’s unlikely that the price of property will crash any time in the near future, even though the RBA says that a downturn is possible. Ellis said that the RBA was “pretty sure that the boom we saw in the early 2000s managed to end with a fizzle, not a bust. So we don’t expect a sharp reversal from a starting point described by the situation we face now.”

Those interested can read Luci Ellis’s full speech here.

Filed Under: 2013, Australia, Banks, Property, Rates, Real Estate, Times Tagged With: Home loans, Price rises, RBA

Reader Interactions

Leave a Reply Cancel reply

You must be logged in to post a comment.

Primary Sidebar

Search

Like us on Facebook

Our Twitter Feed

Tweets by @AusBizChannel
Protected by Copyscape Website Copyright Protection

Counter

Footer

Featured Page

research in australia

20 Top Research Organisations

We are compiling a list of top 20 and more research organisations  which are in the government as … Read more about 20 Top Research Organisations

acquistion

Takeovers & Mergers

List and updates Of the latest  Company Takeovers … Read More about Takeovers & Mergers

funding from govt 2017

Australian Business Grants

Establishing a business anywhere in Australia … Read More about Australian Business Grants

listing directory australia

Australian Business Directory

If you are looking for a Free or paid listing on a … Read More about Australian Business Directory

About

About - Australian Business Report and … Read More about About

Guest Post for us

Join Australian Business … Read More about Guest Post for us

Copyright © 2023 · News Pro on Genesis Framework · WordPress · Log in