Housing market rebounds from December slowdown

by Mike Wood02 Feb 2022

CoreLogic has released data suggesting that the housing market in Australia is now plateauing, with dwelling values up 1.1% in January compared to December.

January is traditionally a slow month for house sales, as is December, but saw an uptick across the board – particularly in Melbourne, where values had fallen slightly at the end of 2021 but rose again in the first month of the new year.

Brisbane and Adelaide still remain in a strong growth phase, confirming theories among experts that their property booms might yet continue despite a slowdown on a national level.

Read more: Median capital city house price passes $1m as boom continues apace

“As the volume of home sales moves out of seasonal lows, we should get a firmer reading on how 2022 is shaping up,” said Tim Lawless, research director at CoreLogic.

“The early indication is that housing markets are starting 2022 with a similar trend to what we saw through late last year. Values are still broadly rising, but nowhere near as fast as they were in early 2021.

“A softening in growth conditions has been influenced by less government stimulus, worsening affordability, rising fixed term mortgage rates and, more recently, a slight tightening in credit conditions, and a surge in new listings through the final quarter of last year.”

With prices continuing at elevated levels, lending also grew, with the ABS recording an increase of 4.7% as borrowers moved in advance of a potential cash rate rise in 2022.

“Home lending activity surged again over December following the sharp recovery spike in loans reported over the previous month,” said economist Andrew Wilson (pictured), of Bluestone Home Loans.

“Home loan totals over 2021 have clearly reached record levels despite the COVID challenges presented to housing markets.

“The ABS reports that the value of home loans seasonally adjusted (excluding land and alterations and additions) increased by 4.7% over December compared to the previous month and remained 20.3% higher than reported over December 2020. Home lending increased by an annual record 48.5% over 2021.   

“All states reported increases in lending activity over December with the exception of SA and NT – VIC and WA reported the strongest results, up by 4.7% and 4.6% respectively.

“Although home lending declined over December, the outlook for 2022 remains generally positive although activity will be unlikely to match the record growth levels of 2021 - reflecting the impact of sharply rising affordability barriers and the satisfaction of pent-up demand.”