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Home prices across Australia’s mainland state capitals stopped falling last week, adding to a lengthening list of indicators that suggests housing market conditions may be starting to stabilise.
According to CoreLogic, median prices across Sydney, Melbourne, Brisbane, Adelaide and Perth were unchanged last week in average weighted terms. Prices in Sydney, Melbourne and Brisbane were steady, helping to offset small declines of 0.2% and 0.1% respectively in Adelaide and Perth.
Over the past month, median prices across these capitals fell 0.4% in weighted terms, considerably slower than the near 1% monthly declines regularly seen late last year and in early 2019.
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While one week does not make a trend, the stabilisation in prices, particularly in Sydney and Melbourne where prices have fallen the most over the past year, is noteworthy, especially as it follows a recent improvement in housing finance, auction clearance rates, sentiment towards buying, and the outlook for prices.
Although it remains far too soon to declare that prices may be close to bottoming, especially as this is traditionally a seasonally strong period for prices, it appears that market conditions are not deteriorating any further, at least in this point in the downturn.
The slowdown in the pace of price declines has coincided with a sharp reduction in new property listings across all capital cities except for Hobart over the past year, according to data from CoreLogic.
At 19,580, the number of new listings is currently down 21.9% from the level seen this time a year ago, driven by substantial declines of 32.6% and 28.7% respectively in Melbourne and Sydney.
With the exception of Hobart where new listings increased by 14.8% from a year earlier, declines of between 6.8% and 14.1% have also been seen across all other capital cities over this period.
While total listings across the capitals are still up 8.1% on the levels of a year ago, the combination of fewer new listings, even with weak demand, has seen the annual increase in listings fall significantly compared to levels seen earlier this year.
With new listings still trending lower, largely reflecting the impact of weaker market conditions over the past year, it could help to limit the scale of price falls in the months ahead as prospective buyers compete for fewer available properties.
On the demand side of the equation, macroeconomic conditions, possible changes to the tax treatment of housing following the federal election, population growth, the outlook for mortgage rates and the ability to obtain housing finance will also determine when prices will eventually start to bottom.
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