SYDNEY: Australian home prices nudged higher in August, posting a 19th straight monthly rise, though the pace of growth showed some signs of slowing, data showed on Monday. Figures from property consultant CoreLogic showed national home prices rose 0.5 percent in August, slightly above the downwardly revised 0.3 percent rise in July. Prices, which have continued to hit record highs since bottoming out early last year, are up 7.1 percent from a year ago.

But CoreLogic said the quarterly increase of 1.3 percent is now less than half the rate of growth in the same three-month period a year ago. “While seasonality may have contributed to weaker value growth through winter, affordability constraints are a key factor behind the broader slowdown,” CoreLogic’s Head of Research Eliza Owen said in a statement. Still, there is more demand for housing than supply though the market was becoming “increasingly balanced,” Owen said.

Rates of increase across the cities remained diverse as prices rose 2.0 percent in Perth, followed by a 1.4 percent increase in Adelaide and 1.1 percent in Brisbane. Sydney rose a mild 0.3 percent, while prices dipped in Canberra, Melbourne, Darwin and Hobart.

A Reuters poll of property analysts last week showed average home prices in Australia will rise more than 6 percent this year, before moderating slightly in coming years. The Reserve Bank of Australia has raised interest rates by 425 basis points since May 2022 to tame inflation, but the gains in the real estate market have defied expectations, helped by record immigration and a limited housing supply.

While that may be good news for property owners, the recent rally in house prices will make it more difficult for first-time home buyers. The RBA is not expected to reduce rates this year and is forecast to cut by just 75 basis points in 2025. Home prices were expected to rise an average 6.3 percent nationally this year, according to the Aug. 20-29 Reuters poll of 13 property market analysts, faster than the 5.3 percent rise predicted in a May survey. That outlook was largely driven by expectations of strong price growth in some state capitals.

“I see consistent growth in the next couple of years, but no boom. The growth will be underpinned by our very strong migration and the fact we’re not building enough dwellings,” said Michael Yardney, founder of Metropole, a real estate advisory firm. “Property markets are always fragmented based on local factors. But what has surprised many analysts is the strong performance of Perth, Adelaide and Brisbane. It’s a combination of more people, strong wages, and up until recently, relatively cheaper properties.”

Home prices in those three cities were expected to rise by 22 percent, 14 percent and 12 percent, respectively, in 2024. In Sydney, Australia’s biggest city, prices were forecast to rise 5 percent; in Melbourne, they were predicted to fall 0.4 percent. At a national level, average prices are expected to rise 4.3 percent in 2025 and 4.5 percent in 2026, the poll showed. “There’s no short-term solution to fixing the Australian housing market or affordability ... Owning a house will remain a luxury good for many and we think renting is probably going to increase its dominance, as it has over the last decade or so,” said Johnathan McMenamin, senior economist at Barrenjoey. “Even once we get interest rates coming off their peaks, there isn’t enough housing in Australia for the population we have and we think that will continue to put upward pressure on house prices.” Relatively high mortgage rates and a short supply of affordable homes are expected to force many would-be first-time buyers to keep renting despite it eating up a relatively large proportion of their earnings. Rents have increased nearly 40 percent over the past five years in Australia, according to data from CoreLogic. Average urban home rents will rise 5-7 percent over the coming year, according to the median view of eight economists in the poll. — Reuters