According to recent statistics from the Real Estate Institute of Australia (REIA), the weighted average capital city median price increased by 2.3% for houses and 2.1% for other dwellings over the September quarter.
That rate of growth is slower than the 4.2% for houses and 3.3% for other dwellings seen over the June quarter.
The average median house price in a capital city now sits at $698,826 and $549,145 for other dwellings.
REIA president Neville Sanders said he believes the price slowdown is an indicator of a market that is beginning to ease.
“What we’re viewing it as is a bit of a slowdown in price growth and the start of a period where things are beginning to ease off,” Sanders said.
“Even the auction results recently are slowing. Now auctions only account for probably about 30% of all transactions, but they’re a good indicator of what level of buyer activity is out there and how competitive they are,” he said.
Sanders said the latest lending figures from the Australian Bureau of Statistics show that investors in particular are taking their foot off the pedal; something he believes is a good thing.
“I think we’re definitely starting to see things ease off form the investor side. I think there was a sense for a while that people thought they had to get in now because they didn’t want to miss a good thing,” he said.
“But that’s when people start buying based on emotion, and with investors you really want them buying based on a business view, rather than just being swept up in things.”
In Sanders’ opinion the change of conditions in the market is the result of declining appetite among investors and the intervention from the Australian Prudential Regulatory Authority.
“I think in some ways a lot of investors out there are satisfied with their situation. When you have this period where things are moving along, people often play catch up. Things were subdued for a few years, so there was a bit of backlog and now that’s been caught up.
“The other thing was the rhetoric, especially from APRA, that investor lending needed to slow down. They seemed to have done that in a subtle way, rather than by blunt force.
“I say subtle because the changes have meant investors have been hit with a 0.25% or 0.27% increase in interest rates, which isn’t a huge increase but it comes with a little message that I think investors took note of.”
That subtle message was a necessary one.
“I think it was a good thing, you never want people to be stretched to their absolute utmost,” Sanders said.
“I don’t think there was a huge number of people out there who were going beyond their means, but it’s just a good thing to remind people about what could happen if they’re suddenly left with a cash flow problem because they lose a tenant or they have to cover a large repair cost to a property.”
While he says the Australian market is in a transition, Sanders doesn’t believe there is any real chance of significant price corrections.
“There’s no evidence around that we’re going to see any sudden corrections happen.
“If you look at the last time there was severe changes we had high interest rates, high unemployment and low population growth and if you look around at the moment none of those things are present.”