Australian house prices continued their recovery in December 2019 with national dwelling prices going up by 1.1% according to CoreLogic's monthly results.
As you might expect, the biggest areas of growth were Sydney and Melbourne with prices going up 1.7% and 1.4% respectively.
Brisbane and Adelaide house prices also went up by a solid rate, showing growth of 0.7% and 0.5% for the month.
There wasn't much change for Hobart prices, up 0.2%, and Canberra prices, up 0.1%. Perth property prices showed a 0% change over the month.
However, Darwin continued its decline with a 0.5% drop in December 2019.
2019 was definitely a mixed bag for our capital cities. Sydney and Melbourne house prices both finished up 5.3% for the year despite the earlier declines. Perth prices fell 6.8% and Darwin prices dropped 9.7% during 2019. Hobart and Canberra rose 3.9% and 3.1% respectively over the year, while Brisbane prices grew 0.3% and Adelaide prices actually fell 0.2%.
The Head of Research at CoreLogic, Tim Lawless, theorised that the growth in December was slower than November and October because of higher advertised stock levels and/or worsening affordability pressures.
However, house price growth returned in the second half of the year because of "lower mortgage rates, a relaxation in borrower serviceability assessments, improved housing affordability and renewed certainty around property taxation policies post the federal election. Lower advertised stock levels persisted providing additional upwards pressure on prices amidst rising buyer activity."
What does this mean for the wider Australian economy?
Well, Mr Lawless said that "A nominal recovery in housing values implies home owners are becoming wealthier, which may also help to support household spending. However, the flipside is that housing affordability is set to deteriorate even further as dwelling values outpace growth in household incomes, signaling a set-back for those saving for a deposit."
But it's obviously good news for the ASX businesses that are involved in selling properties. The REA Group Limited (ASX: REA) share price is up 1.7%.
However, there seems to be some selling pressure on our ASX blue chips that are domestically focused. For example, the Wesfarmers Ltd (ASX: WES) share price is down 0.5%, the Commonwealth Bank of Australia (ASX: CBA) share price is down 0.25% and the Westpac Banking Corp (ASX: WBC) share price is down 0.3%.
