Australian property prices have finished the financial year 13.5 per cent higher – the highest annual growth rate that has been seen since the market was winding down from the residential housing boom of 2004.
According to the CoreLogic home value index, property prices were up by 1.9 per cent for June, with each of the capital cities seeing an increase in values ranging from a 3.0 per cent rise in Hobart to a smaller 0.2 per cent lift in Perth. Property values in Sydney were up by 2.6 per cent for the month.
Over the past year houses have outperformed units by more than double with a 15.6 per cent rise seen in the housing market, compared to a relatively small 6.8 per cent increase for units.
CoreLogic Head of Research for Australia, Eliza Owen said there were a number of factors driving housing demand through the first half of 2021, before the recent COVID outbreaks emerged across the country.
“In May, the unemployment rate fell to 5.1 per cent, and the underutilisation rate fell to 12.5 per cent, the lowest level since February 2013. Consumer confidence remained elevated through June, although down from the recent April highs.
“Elevated savings accumulated through COVID-restrictions last year, along with a more confident consumer sector, has encouraged consumption of larger goods, such as housing. This has all occurred against a back-drop of continued low mortgage rates, which is one of the most significant demand drivers.”
In addition to the above, relatively low advertised housing stock has contributed to a strong sense of urgency amongst homebuyers.
However while demand for property remains strong there are some signs that the current market frenzy is starting to slow down.
A loss of momentum in housing prices is most evident across Perth and Darwin, however Ms Owen noted that there may be a slightly different supply-demand dynamic in these cities compared to the other capital cities and regions.
Softer growth rates are emerging at the ‘high end’ of the market for the combined capital cities though, which could be evidence that the heat is coming out of the market.
According to Ms Owen “This easing in the pace of growth at the top end of the market is another clear sign of a shift in momentum.
“The rest of the market tends to follow movements at the high end, and this is the first time in nine months that the high-tier growth rate has not accelerated.”
Visit www.corelogic.com.au to see further figures from June’s home value index.