The downturn in the Australian housing market is rather weak compared to those seen in the past, so far at least



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  • House prices in Australia have fallen 0.8% over the last year, according to CoreLogic.
  • Compared to previous slowdowns, this one seems rather tame up here.
  • While little suspects that the downturn will become something more sinister, every time the next price hike begins, it's likely to be pretty sweet.

For all the negative headlines on the last downturn in the Australian housing market, it has been rather tamed – up to now – compared to those seen in the past.

Here is a proof.

Macquarie Bank shows nationwide price measures of CoreLogic and Australian Property Monitors going back to early 2004.

On an annualized monthly basis, the recent slowdown was relatively small, slightly larger than the one a few years ago, but much smaller than those observed on either side of the GFC and in the mid-2000s.

If that is the "bursting of the bubble", open the the way to an all-powerful economic downturn unmatched in Australia for decades Even if such a result could be played out – and that's a risk – few traditional forecasters think that such a result is likely in the future. absence of an unexpected economic shock abroad. , raise unemployment, or abrupt decline in the population growth in the country.

Many suspect that the slowdown will be around 10-15% in Sydney and Melbourne, stretching for many years, with smaller Australian capital markets and regional areas expected much better.

Given the risks, such a result would be enviable given the price trajectory before the last downturn and the subsequent accumulation of household debt.

If the general consensus is true, one may wonder what the next price rally will look like, every time it happens.

Will it be at dizzying speeds as we have seen in the past or something slower?

Although individuals have different points of view, it is difficult to see a repetition of previous cycles.

For one, the official interest rates of the RBA are already at historic lows. And with short-term financing costs for lenders remaining at high levels, we have already seen some smaller lenders provide out-of-cycle mortgage rate increases to borrowers.

Throwing into the likelihood that tighter lending standards will remain in place, coupled with record levels of residential construction, moderate growth in household incomes and ongoing capital controls restricting many Chinese citizens – the biggest source foreign demand – to buy Australian goods, and headwinds for price growth currently seem quite rigorous.

The next comeback – whenever it starts – looks like a slog rather than a spectacular rebound seen so often in the past.

The opinions expressed herein are those of the author and may not represent the opinions of Business Insider ..

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