Property prices last week posted their smallest weekly rise since early June, a normal slowdown for this time of year rather than a sign that the housing boom is going bust.
Sydney and Melbourne, as usual, led the way, even though their gains were small by recent standards.
The weekly report from CoreLogic RP Data showed the average price in the mainland state capitals rose by 0.1 per cent over the week to Sunday, with Melbourne and Sydney up by 0.2 per cent and Perth by 0.1 per cent.
Prices in Adelaide fell by 0.5 per cent, while Brisbane dropped back by 0.4 per cent.
But the annual changes tell the real story, with Sydney posting a 17.4 per cent rise and Melbourne up by 10.6 per cent.
Sydney gained some notoriety last week with the Domain housing report putting the median house price at over $1 million for the first time.
The CoreLogic RP Data measure, based on sales in the quarter, put the Sydney median house price at $900,000. Either way it’s high, and heading higher.
Annual gains were more subdued in Brisbane, 4.1 per cent, and Adelaide, 2.5 per cent.
Prices in Perth last week were down by 1.0 per cent from a year earlier. A year ago, Perth’s annual price growth rate was 3.6 per cent, and a year before that it was 6.5 per cent, a pattern reflecting the end of the mining investment boom.
But the big two markets are strong, despite the weekly gains in both being the smallest after five weeks of big gains as the market made its usual recovery from the regular late-spring/early-winter lull.
The recovery typically gives way to slower rises, or even a pause, around this time. So it’s not the start of a new period of weakness – it’s just what normally happens at this time of year.
There’s no reason to suppose the housing price boom in Sydney and Melbourne is going bust.
The NAB’s quarterly residential property survey last week confirmed two important sources of demand for housing are still strong.
Foreign buyers, according to the survey of industry professionals, accounted for 12.8 per cent (one in eight) of sales of new homes and 8.6 per cent (one in 11) of sales of established homes in the second quarter of 2015.
Another key, but until recently little noticed, source of demand is first-home buyers entering the market for the first time as investors.
This group is not identified separately from the the larger “investors” category in Reserve Bank of Australia and Australian Bureau of Statistics data, and not included in official estimates of the number of first home buyers.
But, according to the NAB survey, they accounted for 12.8 per cent of sales of new homes and 9.8 per cent of established homes in the second quarter. So it’s not all about foreign investors.