House prices might just be slowing down but the boom isn't over yet.
Corelogic released its monthly house price index on Monday, showing residential real estate prices rose 1.49 per cent nationally in the month of October.
It's a similar result to August and September, but well down from the peak of 2.8 per cent growth in March.
The data indicates the market is continuing to slowly lose momentum as downside risks build.
It comes as regulators introduced tougher new lending rules which come into effect today, meaning prospective buyers will need to prove they can manage repayments if interest rates increase by 3 per cent, even if that is higher than the bank’s own serviceability floor.
Perth prices go backwards for first time in 16 months
When you dig under the national growth rate, there are signs of divergence among Australia's different property markets.
House prices in Perth went backwards for the first time since June last year, with values nudging -0.1 per cent lower.
Brisbane was the opposite story, taking up the mantle as the fastest-growing market with values up 2.5 per cent in October.
Adelaide and Hobert were both up 2.0 per cent for the month, with Canberra close behind with a rise of 1.94 per cent.
Melbourne's home prices rose by 0.99 per cent while Sydney was up 1.5 per cent.
Nationally, home values are up a whopping 21.6 per cent over the year to October.
Downsides loom on the horizon
CoreLogic’s research director, Tim Lawless, said there were three obstacles to continued house price growth in the country: worsening affordability, increased supply and new credit restrictions.
"Wage growth is about 1.7 per cent [per year] and we're seeing house prices rise about 1.5 per cent a month. Clearly something has got to give," he told Yahoo Finance.
"We're seeing demand be impacted by worsening affordability."
Lawless said supply was also beginning to ramp up "quite swiftly" with more sellers coming into the market, which should help cap price rises.
"It means there's more choice for buyers and a little less urgency," he said.
"But it's still a seller's market, quite remarkably so," he added.
Also read: House price are set to fall, but not by much
While he described APRA's (Australian Prudential Regulation Authority) recent credit controls as "quite a light touch", he did believe the measures would kick in soon and be "a net negative" for the housing market.
By the summer, Lawless thinks the market will normalise with growing supply but doesn't see prices stabilising "for a while yet".
"A 1.5 per cent growth rate nationally is still way above average," he said. "It will take some time for that growth to come out of the market."
"I don't think we'll see the housing market move into a downturn until interest rates start to rise."
With all eyes on the Reserve Bank of Australia, others are predicting house price falls in 2022 with a growing expectation that official interest rates will start to rise before 2024.