real estate is losing heat – Australian Associated Press

Homebuyers’ budgets are hitting the ceiling, slowing the rate of property price growth.

The company’s head of research and economics, Nicola Powell, says the housing market appears to be shifting in favor of buyers.

“Supply is increasing, days on market are longer and discounts are also increasing,” she told AAP.

“Everything points to an overall slowdown and it is possible that we will see prices fall even in the last quarter of this year at the capital aggregate level.”

However, prices continued to rise in the three months to September.

Domain recorded growth of 0.8% for the quarter and slightly more for units, with both numbers hitting all-time highs.

But prices are not rising as fast, with the pace of quarterly house prices in Sydney and Perth rising twice as fast as the previous quarter.

Dr Powell said apartments in cities such as Sydney and Melbourne were performing better than houses, evidence of limited availability and buyers looking for less expensive options.

Rising inflation and wages – steady but not fast enough to keep pace with the housing market – weighed on demand, and high interest rates limited borrowing capacity.

“As prices continue to rise, the pool of buyers becomes increasingly limited,” Dr. Powell said.

“Consequently, as purchasing power declines, it becomes increasingly difficult for buyers to remain competitive, leading to a further slowdown in activity.”

She said buyers were “waiting on the sidelines” for clearer signals on interest rate movements.

“We’re seeing an increase in listings… but it’s just not matching the higher level of demand because I really think buyers are just waiting.”

The Reserve Bank of Australia is keeping its key rate high to tame inflation, which is slowing but still outside its target range of two to three percent.

In the September quarter, Brisbane, Adelaide and Perth continued to outperform other capital cities’ property markets.

House prices rose a further 4.2 per cent in Adelaide, 3.1 per cent in Perth and 1.5 per cent in Brisbane.

As the average price of a house in Queensland approaches the $1 million mark, demand for housing has increased, with apartment prices rising by 3.3 per cent.

Dr Powell said many cities were able to continue to grow because they started from relatively low levels, with Perth, for example, underperforming for much of the 2010s.

These cities were not only playing catch-up, but also experiencing high rates of interstate migration.

With growth expected to continue in Brisbane and Adelaide, Dr Powell said Australia was on track to have five capital cities with average house prices above $1 million.

Melbourne held up surprisingly weakly, with house prices falling 1.5 percent and apartments rising a modest 0.5 percent.

Dr Powell attributed Melbourne’s poor performance to tax changes, weaker interstate migration and better housing performance than elsewhere.