The key points are:
CoreLogic data shows average home prices rose 0.3% in February, after a brief three-month downturn of just 0.4%.
The upswing came in anticipation of, and then confirmation of, an RBA rate cut which boosted buyer confidence.
Annual growth in rents slowed to 4.1%yoy, the slowest since 2021. Poor rental affordability leading to rising average household sizes and easing student arrivals are weighing on demand for rental property.
Australia continues to have a chronic shortage of homes, estimated to be around 200,000 dwellings and possibly as high as 300,000. This partly explains the resilience of home prices despite the rise in mortgage rates since May 2022.
RBA rate cuts are expected to drive a modest upswing in average prices this year. However, while there is still a big housing shortfall in Australia, the upswing will be starting from a point of still poor affordability, interest rates are only likely to fall modestly, and population growth is slowing.
After 4.9% growth last year, we expect average property prices to rise around 3% this year.