- Sydney and Melbourne recorded the highest monthly rise in home values
- CoreLogic's report confirms the trend of housing outperforming units
- Central bank stimulus and low advertised supply continues to drive property boom
According to CoreLogic‘s housing market update report for March 2021, housing values are rising across every capital city.
Driven by a combination of record-low mortgage rates, improving economic conditions, government incentives, and low advertised supply, a synchronised growth phase like this hasn’t happened in Australia for over a decade.
The last time we saw a sustained period where every capital city and rest of state region was rising in value was mid-2009 through to early 2010, as post-GFC stimulus fueled buyer demand.
NAB‘s national housing index showed similar results, with housing values surging 2.1% higher in February, which was the largest month-on-month rise since August 2003.
Sydney and Melbourne recorded the strongest lift in home values over the month, catching up from weaker performance through 2020 (growth of 2.5% and 2.1% respectively).
While the two major cities’ home values are still recording growth less than their earlier peaks, the report expects that with this current rate of appreciation, they will be moving through new record highs.
However, when looking at the data quarterly, smaller cities were the big outperformers.
Over the past 3 months, Darwin housing values rose 5.5%, Hobart values rose 4.8% and Perth values rose 4.2%.
As reported before on The Property Tribune, and a trend that is confirmed once again with CoreLogic’s data, detached housing continues to outperform units.
The report’s combined capital index has recorded a growth rate of more than three times higher than that of units.
However, there are signs that this trend becomes less prominent, namely that of Sydney unit values recording their first growth since April 2020 and Melbourne unit values recording their largest gain since late 2019.
In addition to the obvious driver of the property boom being central bank stimulus (see this article from today on the debate between monetary doves and hawks), lower advertised supply levels are contributing to higher prices.
The most recent measure from CoreLogic has seen advertised supply well below that of recent years, with the number of properties advertised for sale nationally remaining 25.3% below 2020 levels over the 28 days ending 28 February 2021.
In saying this, the quarterly number of home sales is estimated to be up 35.3% on 2020 levels.
In conclusion, CoreLogic’s report confirms the strong boom in Australia’s housing market. In fact, major banks like Westpac has forecast 20% gains in the housing market over the next 2 years, while the Commonwealth Bank of Australia recently predicted up to 16% growth over the next 2 years (covered in this article).
As reported before, the Reserve Bank of Australia looks to maintain an exceptionally easy stance on monetary policy in light of low inflation predictions. These unprecedentedly low-interest rates will continue driving the housing boom.