Australian home prices flatlined in January - CoreLogic

SYDNEY, Feb 3 (Reuters) - Australia's home prices flatlined in January as weakness in the major cities offset gains in the countryside, data showed on Monday, while the mounting chance of a near-term cut in interest rates could provide some support to demand over time.

Figures from property consultant CoreLogic showed prices across the nation were unchanged in January from December, when they dipped 0.1%. Values in the cities fell 0.2% in January, while the regions rose 0.4%.

Sydney and Melbourne led the losses, while Adelaide and Perth remained strong amid a lack of supply. Annual growth in national prices stood at 4.3%, down from a peak of 9.7% early last year.

Tim Lawless, CoreLogic's research director, noted financial markets were wagering the Reserve Bank of Australia would cut interest rates in February, the first easing since 2020.

"Lower mortgage rates and a subsequent lift in borrowing capacity as well as an under supply of newly built housing could be setting the foundations for a relatively shallow housing downturn," said Lawless.

However, he argued a sharp pick-up in prices was unlikely given stretched affordability and a slowdown in population growth amid government restrictions on migration.

There were also signs of a welcome cooling in the rental market, where rents in the major cities had surged by 37% over the past five years. Over the six months to January, rents in Sydney were now down 0.4%, while those in Melbourne fell 0.6%.

That was a promising sign for inflation as rents had been a major driver of higher costs in the past few years.

"The outlook for rental markets is a further easing, driven by affordability constraints, less migration and larger households," said Lawless.