Past quarter’s flat and falling property values are not a one-off

A fall in Sydney property values and record high household debt will make major interest rate rises unlikely, CoreLogic has predicted.

CoreLogic’s October Home Value Indices saw Sydney median values fall for another month, now down 0.6% over the quarter, placing the Harbour City alongside Perth and Darwin where values are also falling.

With an RBA cash rate increase not likely to occur until early 2019, states the report, means that “mortgage rates aren’t likely to rise materially over the foreseeable future.”

CoreLogic research director Tim Lawless noted that “with household debt at record highs, higher mortgage rates would test already stretched household balance sheets.”

Overall capital city values were flat in October and showed a 0.4% rise over the quarter, led by Melbourne (1.9% over the quarter) and Hobart (3.3% over the quarter).

Have we passed the rate hikes?

CoreLogic’s expectation of largely flat interest rates is shared by other analysts.

QBE’s recently released Housing Outlook 2017-2020 did predict that standard variable rates for property investors QBE AUSTRALIAN HOUSING OUTLOOK 2017 2020 by @GillandDebello #property #propertymanagement https://www.slideshare.net/GillandDebello/qbe-australian-housing-outlook-2017-2020would rise to 6.50% (for interest-only) and 6.05% (for principal and interest) by 2020.
However, both of these increases can be fully explained by a predicted increase in the cash rate in early 2019. This suggests that the recent surge in out-of-cycle rate hikes has now finished.

Furthermore, QBE predicted that rates for owner-occupiers will rise by just 20 basis points, less than the cash rate, as banks chase these types of borrowers.

‘Soft landing’ for the property market

The past quarter’s flat and falling property values are not a one-off, according to CoreLogic.

Lawless has warned that “a further reduction in dwelling values should not come as a surprise”, going on historical property value cycles.

He noted however that “while the weaker Sydney housing market is dragging headline growth rates lower, there are a variety of factors that are likely to support a soft landing across Australia’s housing market.”

 

Advertisements

About ljgrealestate 据联大

Removing the Hassle from Sales and Rentals across South East Queensland. Aim to Empower other like minded Property Investors. L J Gilland Real Estate is a prestigious boutique agency specializing in Property Investment Management Services and the Sales of Investment Properties with tenants in place. Comprised of a top performing group of handpicked specialists, our Agents proudly serve Property Investors in Queensland. Since 1996 our Agency has demonstrated a genuine enjoyment of working with people, developing long-term relationships and delivering on the promise of great service. Carlos and Linda Debello offer property investor's the confidence to sell and lease in any market. We provide comprehensive market appraisals, exclusive multimedia marketing campaigns, and knowledgeable, highly personalized counsel on all aspects of real estate. Our Property Management Team is equally considerate, offering investors with in-depth advise, well-researched rental valuations, and highly professional rental management services. http://goanimate.com/movie/0M4bvcZzgIbI?utm_source=linkshare&uid=0u6RGtWsmlVc Carlos’ direct mobiles are 0400 833 800 & 0413560808. Linda’s mobiles are 0409995578 & 0414978700 (prefer email contact for Linda). Office 07 3263 6085. http://www.ljgrealestate.com.au http://www.yellowpages.com.au/qld/aspley/lj-gilland-real-estate-pty-ltd-14091356-listing.html http://au.linkedin.com/in/lindajanedebello http://twitter.com/GillandDebello http://www.facebook.com/pages/ljgrealestate
This entry was posted in ECONOMY FINANCE BUSINESS LJGREALESTATE RENTALS PROPERTY SALES PROPERTY INVESTOR PROPERTY MANAGEMENT, LJ Gilland Real Estate Pty Ltd and tagged , , , , , . Bookmark the permalink.