Yahoo Finance Australia’s $10 trillion property market bigger than GDP and ASX combined
Australia’s property market has bounced back to fresh heights.
The Aussie property market is no longer in a downturn. In fact, it has bounced back to its previous all-time high, with a combined value of $10 trillion.
For comparison, the entire value of Australia's GDP is $2.6 trillion, and the value of Australia’s share market, the ASX, is worth around $2.3 trillion.
The jump in the overall value resulted from a combination of higher values - with the median home value in Australia reaching $732,886 at the end of the month - and the stock of housing increasing to around 11 million properties, according to CoreLogic.
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The recovery in home prices began in March this year, with values rising 4.9 per cent through to the end of August.
The recovery wiped out around half of the preceding downturn between April 2022 and February 2023, when national home values fell 9.1 per cent from peak to trough.
How are property prices rising when interest rates are through the roof?
CoreLogic said there were a number of factors that may explain why home prices were still skyrocketing despite cost-of-living pressures.
1. There are more people
Demand for housing is being pushed higher by a combination of an increase in people coming into the country, and a drop-off in people choosing to leave.
Last year, departures from Australia were down about 25 per cent on the pre-COVID average, while overseas arrivals ticked slightly higher on levels seen in 2019.
“This is pushing the need for housing higher, and may be contributing to more competitiveness for properties on the market, especially considering rental vacancy rates remain around record lows,” CoreLogic said.
2. Aussies dipping into their savings
People may be drawing down on their savings, equity from owning another property or profits from selling a precious property and they’re using it to buy big. But that may not last.
“It is uncertain how long households can draw on savings to support purchases. ABS national accounts data shows the household saving ratio, which measures the ratio of net saving to net disposable income, has declined to 3.7 per cent amid high inflation and debt costs. This is down from COVID record highs of 23.6 per cent,” CoreLogic said.
3. We still don’t have enough properties to house everyone
Total listings of properties has remained fairly low, even as new listings have started to increase in the lead-up to the spring selling season.
In the four weeks ending September 3, total listings across Australia were sitting around 136,000 - down a massive 23.4 per cent than the previous five-year average.
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