From NAB's economists today:
** After rising by 0.2% in April the RP Data-Rismark (hedonic) home values index rose by a slightly faster monthly rate of 0.6% in raw terms in May, with the annual rate virtually steady at 12.1% in May (April was 12.2%)
** Adjusting for seasonal factors also revealed that an anticipated marked slowing in house prices growth (or an outright decline) did not arrive across the capital cities. On a non-seasonally adjusted basis, Sydney prices rose by 0.4% for the second month in a row (11.3% y/y in May), while Melbourne prices rebounded with a vengeance, up 1.5% in the month after being up 0.4% in April (and up 18.2% y/y). So did Brisbane prices, up 1.4%/6.7% after -0.8%/6.1% in April, Adelaide prices growth slowed to 0.5% from 1.2% (+10.5% y/y), while Perth prices fell further, down a large 2.4% after a 0.3% April fall (up 6.1% y/y). Darwin prices rose 0.8%/16.8% y/y and Canberra prices rose 2.5%/16.4%. Hobart prices fell in April by 3.4%/+6.2% y/y (latest available)
** Across the various price categories, it’s evident that the bottom 20% of capital city suburbs have seen prices growth slow in trend terms to near flat, the top 20% has seen prices growth cool markedly in the past two months from over 2% per month to barely positive growth while the middle market (the other 60% of suburbs) show trend prices growth slow much less, to a still heady 0.8% per month from 1%-plus to March, so much less slowing
** On a seasonally adjusted basis, capital city hedonic prices rose 0.5%/12.1% after 0.4%/12.3% in April. It’s certainly true that the rate of growth in prices is slowing, but still rising nevertheless. At the end of last year prices were growing at over 1% per month; that growth has since halved to around ½% per month
** While capital city prices continued to grow, regional prices fell in May by 0.2% after a 0.5% April rise with annual growth at a slower 5.8% to May, down from 6.7% to April
** These data reveal that the housing market is cooling, but far not collapsing. To the RBA, they reflect more resilience across most capital city markets than might have been anticipated give reports of increased supply and rate rises. And these latest rises occurred against a background of another RBA rate rise, some further decline in consumer sentiment and a ramp up of global market volatility. It would seem to us that prices growth will likely ease further, but the next big test might have to wait now until the spring season gets underway with reports that market supply has been enhanced recently in response to higher prices. For now, the housing market is holding up rather well in most capitals
