- Houses recorded 15.6% growth over the past year
- Units grew by 6.8%
- Signs of slower growth, especially in Perth and Darwin
National home values continue to grow, rising 1.9% in June, according to a report released today by CoreLogic.
The June rise means for the last financial year residential property rose by 13.5% – extraordinary given a year ago we were in the midst of the first – albeit very brief – recession in almost three decades.
Houses have led the way recording 15.6% over the year, as buyers demand more living space while units rose by less than half that rate at 6.8%.
This level of growth is the highest seen across the residential property market in Australia since April 2004 after the housing boom was winding down following significant growth during the early 2000s.
Despite this record annualised growth, it should be noted in several markets, growth has been fairly subdued over the past month.
While each of the capital cities saw growth in dwelling values during June – Hobart and Sydney recorded 3% and 2.6% growth respectively – growth was more subdued in Perth, which recorded only 0.2% growth.
The gap between the capital cities and regional Australia has also narrowed with regional Australia recording 2% growth in June compared to 1.9% for the combined capital cities.
Over the financial year, however, combined regional has enjoyed a 17.7% growth with 12.4% for the capitals.
CoreLogic’s Head of Research, Eliza Owen, said many broader demand-side factors had driven the growth in the housing market during the first half of 2021, despite recent uncertainty due to the growing number of local covid-19 case numbers nationally.
“In May, the unemployment rate fell to 5.1%, and the underutilisation rate fell to 12.5%, the lowest level since February 2013,” explained Ms Owen.
“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.”
Eliza Owen, CoreLogic
“This has all occurred against a back-drop of continued low mortgage rates, which is one of the most significant demand drivers.”
Total advertised stock remains relatively low: in the 28 days to June 27th, total advertised stock was 24.4% below the five-year average.
“This dynamic of strong consumer demand, and low housing supply, continues to create some urgency among buyers,” said Ms Owen.
Signs of slowing down
Across the capital cities, both Perth and Darwin recorded relatively subdued growth. While the monthly growth rate in values in Perth averaged 1.4% between January and May 2021, it fell to 0.2% in June. In Darwin, this growth rate averaged 2.1% during the same time frame but was just 0.8% last month.
“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,” added Ms Owen.
Using CoreLogic’s ‘sales to new listings ratio’ – which divides the monthly volume of settled sales by new listings – Darwin and Perth have averaged 1.1, the lowest figure of the capital city markets.
Notably, softer growth rates have emerged at the higher end of the market.
Across the top quarter of dwelling values among the combined capital cities market, growth in dwelling values in June was 8% – a fall of 1.2% from the 9.2% recorded in the three months to May.
“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.”