A slowdown in house price growth has put pay to talk of an overheated market and could open the way for a further fall in interest rates, a survey suggests.
House prices rose 1.2 per cent in the September quarter and by 9.4 per cent for the year, the Domain Group’s latest survey found.
But while national median house prices were up, the quarterly growth rate was the lowest since March 2013.
Sydney was a stand-out performer, with median prices increasing by 3.8 per cent over the quarter to $843,944.
But Melbourne’s prices were relatively flat, increasing by just one per cent, the lowest result in the survey for two years.
Brisbane, Adelaide, Perth, Hobart and Canberra all recorded falling house prices.
Darwin’s prices rose by a sharp 2.9 per cent over the quarter, but Domain Group senior economist Andrew Wilson describes that sector as volatile.
Dr Wilson said the overall figures were notched up in “a generally problematic economic climate”.
That was borne out by official inflation data on Wednesday, that showed inflation rose 0.5 per cent for the quarter and 2.3 per cent for the year, tracking at the bottom of the Reserve Bank’s expectations.
“The latest APM PriceFinder results (used to obtain the figures) that indicate weakening price growth will act to extinguish recent debate regarding the prospect of overheating housing markets and new policy initiatives,” Dr Wilson said.
“With no clear sustained revival in economic activity on the horizon, housing market activity will continue to generally decline as affordability falls and confidence wavers.
“A declining economic environment may open the gate for interest rate falls, particularly if jobless rates continue to climb.”
That said, interest rates are nonetheless set to move in a narrow range, if at all, over the foreseeable future with house price growth to continue to flatten accordingly over the medium to longer term, Dr Wilson said.