Australia's housing market experienced a significant slowdown in July, a marked contrast to the strong growth seen earlier in the year. The primary cause? The Reserve Bank's decision to hold interest rates, which temporarily stalled market momentum. However, this pause appears to be a brief interlude before a renewed acceleration, with experts predicting a series of rate cuts on the horizon.
According to Ray White Group Chief Economist Nerida Conisbee, national house price growth was flat in July, a sharp shift from the 1.0% growth recorded in June. But Ms. Conisbee anticipates this lull is temporary, as markets are positioning themselves for a rebound with a widely anticipated 0.25% rate cut in August, followed by two more before the end of the year.
As the expected rate cuts begin, the housing market is predicted to return to its previous growth trajectory. The combination of lower borrowing costs and pent-up demand from July's pause could lead to a particularly strong rebound.
Ms. Conisbee believes that if the anticipated cutting cycle delivers three reductions by year's end, national house price growth could accelerate beyond the current 6.4% annual rate, potentially reaching double-digit territory. Unit markets, having proven their resilience, are also exceptionally well-positioned to benefit from this renewed easing, with their annual growth potentially rising well above the current 5.2% national rate.
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