“Affordability and serviceability constraints are likely to naturally dampen demand, but also renewed cost-of-living pressures and a strong chance that interest rates will rise. There is also slowing population growth to consider.”
For-sale stock remains tight, with Cotality estimating that the number of homes listed is 19% below the level seen at the same time last year and 25% beneath the five-year average for this point in the calendar.
Over the same period, the rolling quarterly volume of sales is assessed to be 1% higher than a year earlier and only 3% below its five-year norm, suggesting demand is still absorbing limited supply.
Lower-priced stock continues to underpin much of the growth, particularly in detached housing. Across the combined capitals, house values in the lower quartile increased by 1.3% in January, compared with a 0.3% rise at the upper quartile.
“This trend of stronger growth conditions at lower price points is supported by intense competition for more affordable houses,” Lawless said. “This is where first-home buyers, investors and, progressively, mainstream demand is most concentrated.”