Australian home values grew 2.2 per cent over May due to improving economic conditions and continuing ultra low interest rates.
That takes the median house price in Australia from $624,997 to $634,355, an increase of $9,358.
Nearly all (97 per cent) of subregions analysed by CoreLogic recorded an increase in values over the last three months, with prices up more than 1 per cent across every capital city in May.
“Both house and unit values lifting across the board,” CoreLogic research director Tim Lawless said.
“Such a synchronised upswing is an absolute rarity across Australia’s diverse array of housing markets.”
May also marked the second time in three months that capital city growth has outpaced regional markets, with city values rising 2.3 per cent compared to 2.0 per cent in the regions.
Hobart led the charge, with values up 3.2 per cent over May, or $13,289 to a median value of $574,543. Sydney recorded a 3.0 per cent ($19,898) increase, while Darwin saw prices increase 2.7 per cent.
In Brisbane, values rose 2.0 per cent, while Adelaide values rose 1.9 per cent and Melbourne Values rose 1.8 per cent.
Canberra saw prices rise 1.7 per cent and Perth recorded a 1.1 per cent increase.
“The combination of improving economic conditions and low interest rates is continuing to support consumer confidence which, in turn has created persistently strong demand for housing,” Lawless said.
“At the same time, advertised supply remains well below average. This imbalance between demand and supply is continuing to create urgency amongst buyers, contributing to the upwards pressure on housing prices.”
However, while the headline results have been “consistently strong”, Lawless noted that the markets leading the growth have shifted.
The cheapest part of the market had previously led the house price growth, but now the most expensive homes are driving growth.
And while smaller capital cities had previously led the market out of the COVID-19 lows, now bigger cities like Sydney have recorded greater growth.
The harbour city saw values rise 9.3 per cent in the last three months from $895,933 at the end of February to $970,355 at the end of May - a $74,422 increase.
Sales activity has also increased across Australia, with activity up around 37 per cent higher than the five-year average.
“The sales to new listings ratio remains around 1.1, meaning for every new listing there is more than one sale occurring,” Lawless said.
“This rapid rate of absorption is keeping advertised inventory levels extremely low, despite the rise in new listings. As a consequence, vendors remain in a strong selling position while buyers have a weak position at the negotiation table.”
The outlook: JobKeeper ending has had no impact
The end of the JobKeeper wage subsidies in March has had little impact on the housing market, however future outbreaks continue to pose significant risks, CoreLogic noted.
“We are expecting housing values will continue to rise throughout 2021 and into 2022, albeit at a gradually slower pace,” CoreLogic said.
“Domestic demand should continue to be supported by the expectation that mortgage rates will remain at their record lows for some time, as well as the ongoing high levels of consumer confidence as the economy expands at a faster than average pace.”
The market will also lose steam as it becomes increasingly unaffordable, while the Reserve Bank of Australia has also flagged it is watching for a deterioration in lending standards.