The latest monthly property value index shows that nationwide residential values for October have increased 8.9% over the past year, and 2.7% over the past three months. This means they are now 10.4% above the previous market peak of late 2007. When adjusted for inflation the nationwide annual increase drops slightly to 7.4% and values remain below the 2007 peak by 4.8%.
The recently introduced LVR caps have the potential to have a considerable impact on the market. By limiting lending to buyers with a low deposit this will cause those people to reconsider their options. Some will choose to hold off and save more, some will find other sources of money to boost their deposit, and others will lower their price expectations. It will take some months before any evidence of this becomes clear.
