Sure, the value of the average Australian home may have fallen for nine consecutive months, but it’s far from doom and gloom. Let’s put it all in a bit of perspective.
It’s easy to see a headline such as “Australian dwelling values fall for the ninth consecutive month” and start feeling down about the whole thing.
But let’s put it in perspective
National dwelling values have only fallen 1.3% since their September 2017 peak, according to CoreLogic data.
The news gets even better
Despite the recent consecutive national monthly falls, national dwelling values remain 32.4% higher than they were five years ago.
That means if you bought the average Aussie house for $300,000 five years ago, it’s now worth roughly $400,000 – so you’re still way ahead.
“This highlights the wealth creation that many home owners have experienced over the recent growth phase,” says CoreLogic research director Tim Lawless.
So what’s driving the dip?
Well, according to Lawless, the recent dip is primarily due to tighter finance conditions and less investment activity.
Unfortunately, “We don’t see either of these factors relaxing over the second half of 2018,” says Lawless.
But wait, there is some slightly better news too: “APRA’s 10% investment speed limit is being lifted this month,” adds Lawless.
The cap, which was introduced in 2014, required banks to limit growth in lending to housing investors to 10%.
So that may ease the weaker housing market conditions somewhat, although not enough for pundits to predict the small monthly declines to end just yet.
Your next move
Despite the RBA on Tuesday announcing that they had kept the official cash rate on hold at 1.5% for a record 21st meeting, the recent BusinessDay Scope economic panel gives the RBA an even chance of lifting its cash rate by the end of the financial year.
The survey, which is Australia’s longest running, is made up of 26 of Australia’s leading economists
With so many experts predicting interest rates to rise in the next 12 months, and some banks already increasing their interest rates, now could be a good time to lock in an interest rate on your home loan.
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