“The downturn is gathering momentum in Melbourne and Sydney, while the mid-sized capitals, which have dominated the growth cycle of late, are also losing steam,” he said.
There is also evidence that pressure on the rental market is easing. CoreLogic’s measure of rentals rose by 0.2 per cent in November to be 5.3 per cent up over the past year.
CoreLogic’s Tim Lawless says the property slowdown is being driven by an increase in homes going to market while purchases are falling.Credit: Natalie Boog
The annual change in rents was the lowest since April 2021. A year ago, rents were climbing at 8.1 per cent.
Financial markets are not expecting the Reserve Bank to cut interest rates until at least May.
Lawless said house values could continue falling until the RBA moves.
“A couple of rate cuts might be enough to shore up a declining trend in home values, but it is hard to see any material upward pressure returning until interest rates reduce more substantially and affordability barriers are less formidable,” he said.
The RBA may have to bring forward interest rate cuts if it continues seeing signs of the economy struggling.
The September quarter national accounts, to be released on Wednesday, are expected to show economic growth of 0.4 per cent after a lower-than-expected 0.2 per cent increase through the June quarter.
While it would be the strongest quarter since the start of 2023, it would take annual growth to a modest 1.2 per cent.
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The June quarter figures were a surprise to the Reserve Bank and many analysts as they showed household spending falling for the first time since the depths of the pandemic. The September quarter figures are expected to be a little better due to the start of the federal government’s stage 3 tax cuts, a slowdown in inflation and a lift in wages.
AMP chief economist Shane Oliver said the figures would confirm Australia was still in a per capita recession as the figures had fallen in eight of the past nine quarters.
“This is one indicator of slumping living standards in Australia on the back of the cost-of-living crisis,” he said.
Treasurer Jim Chalmers said the figures would show higher interest rates, global economic uncertainty and cost-of-living pressures continuing to weigh on households.
He said this was likely to continue in the short term.
“We’ve been planning and preparing for a soft landing, and with the economy still growing, inflation back in the band, and unemployment with a 4 in front of it, we are on track for one,” he said.
“We acknowledge that even with the remarkable progress we’ve made in the national data, that doesn’t always translate to how people are faring and feeling in the economy.”
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