Yahoo Finance Aussie house prices surge 13.5% at fastest yearly rise in 15 years
Australian house prices ticked up 1.9 per cent in the month of June, fresh data has revealed, bringing annual growth in the 2020 financial year to an eye-watering 13.5 per cent.
Dwelling values in every single capital city grew over the blockbuster year, with Darwin marking the most meteoric growth at 21 per cent, followed by the nation’s capital of Canberra at 18.1 per cent, according to new figures released by CoreLogic.
Even property prices in Perth – which marked the lowest annual growth of all the cities – rose by 2.1 per cent.
Standalone houses predominantly led the charge, marking 15.6 per cent growth between June 2020 and June 2021 with unit prices lifting a more modest 6.8 per cent.
And in a year that saw Australians look further afield for affordable properties thanks to the lockdown-triggered shift to remote work, regional property price growth outpaced capital city price growth at 17.7 per cent compared to 12.4 per cent.
CoreLogic head of research Eliza Owen said this rate of annual growth had not been seen in well over a decade.
“This is the highest annual rate of growth seen across the Australian residential property market since April 2004, when the early 2000’s housing boom was winding down after a period of exceptional growth,” she said.
“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 backdrop of continued low mortgage rates, which is one of the most significant demand drivers.”
This breakneck pace won't last forever
But like many other experts, Owen doesn’t believe that growth at this pace will be sustainable.
“There are some markets where performance is starting to ease more notably.”
The pace of growth seen in the best performers, Perth and Darwin, is losing steam, Owen said.
“The key to understanding the softer performance in these resource-based markets may be a slightly different supply-demand dynamic compared to the other capital cities and regions,” she said.
And in the higher end of the market, momentum is slowing too. Growth in the top 25 per cent of dwelling values in across combined capital cities has dropped from 9.2 per cent in the three months to May to 8 per cent in the June quarter.
“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.”
Broadly, June’s monthly growth figure of 1.9 per cent is a comedown from the 2.2 per cent seen in May.
And it’s a sharp drop from the March 2021 peak of 2.8 per cent.
Slower growth a sigh of relief for some
While some are cheering at the rising house prices, others are not.
Australia has been named by Bloomberg Economics as having the 15th worst housing bubble in the world.
Housing affordability advocates are concerned: Australia's overall housing and rental affordability is in decline, according to the Real Estate Institute of Australia's latest report.
The nation's most vulnerable are also finding it harder to find a bed to sleep in: the number of social housing homes has fallen from 4.6 per cent in 2014 to 4.2 per cent in 2020.
“Social housing has historically played an important role providing a safe, secure place to call home to those locked out of the private housing market,” said Kate Colvin, policy manager at homelessness advocacy group Everybody’s Home, on Wednesday.
"As more and more people on low to middle incomes are being left behind by rising rents and house prices, the need for social housing in Australia has never been greater."
And a recent report by the UNSW’s City Futures Research Centre, which consulted a panel of 87 economists and housing experts, found that the lack of a coherent housing policy has resulted in out-of-control house prices that threaten economic recovery.
“Policy makers grasp at different pieces of policy impacting housing, including tax policy, monetary policy, macro-prudential policy, housing, infrastructure, planning and other sector actions, but never grasp the whole system,” the report said.
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