Even Though the Great Housing Crash Has Stalled, It Is Not Over Yet

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The great Aussie housing crash, which has devastated the nation’s economy and homeowners alike, is far from over despite signs of a recent pause in house prices.

The Australian housing market has seen a dramatic shift in recent months, with the CoreLogic five capital city index showing prices have been flatlining since February. While the number of homes sold has plummeted in Brisbane, Melbourne, and Adelaide, they are still falling slower than earlier in the year.

CoreLogic said, “In recent times, capital city dwelling values have normally benefited from a seasonal bump of 0.2 per cent in February.”

Sydney, however, has benefited from two other influences. Starting in January, the NSW government allowed first-time buyers to elect not to pay stamp duty but instead go for annual land tax, enhancing upfront purchasing power.

Another factor influencing the Sydney housing market is the return of Chinese buyers and increased student migration. These reports are mainly anecdotal at this stage, but if they are substantiated, they could boost the market.

Unfortunately, while Sydney and other cities have seen some respite, much of Australia still feels the crash’s effects. According to the Reserve Bank of Australia, only a portion of their 325 basis points worth of interest rate hikes has been deemed by borrowers.

This means many home loan borrowers are still on fixed-rate products and have yet to feel the full brunt of the rate hike. The result is an increase in mortgage stress.

The housing market downturn also affects those who want to purchase homes, with banks tightening lending conditions and making it harder for first-time buyers to secure a loan.

Overall, while recent data suggests that some of Australia’s biggest cities may be experiencing a pause in house price declines, the great housing crash is far from over – and it remains highly uncertain what will happen in the coming months as economic conditions continue to evolve.

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