In states where the average loan size remains well above last year’s levels, the gap between dwelling prices and where they were when the pandemic hit is even larger:
In Queensland the current average home loan of $523,000 suggests an average dwelling price of around $780,000, which is almost 50% above the average price in June 2020: All of which is to say that yes the heat is coming out of the housing market, but we need to remember that it wasn’t just on fire last year – it was burning uncontrolled.noted last weekBut the bank is now having to be more mindful of the fact that wages are not rising as fast as they might have expected, and more rate rises will only serve to keep wages growth down.
House prices are now definitely slowing, but here as well we still see the complexity the RBA has to deal with. While it might be worried about absolutely tanking the housing market, the home loan data shows that the cost of building homes continues to grow as the cost of building materials soars:Tuesday’s rise this week does appear to be the beginning of the end of rate rises.
But while house prices are falling from their peaks, the long-term problem of housing affordability remains as we continue to have an economy where house prices have risen faster than wages for so long that even a slight fall in prices will do little to repair the damage of the past two years.