house prices rise
House prices are still rising, albeit at a slower rate. Image – Canva.
  • Housing values rose 17.6% higher over the first nine months of the year, and 20.3% higher over the past year
  • Housing market has moved past it's peak rate of growth in March
  • The monthly rise in values has eased back to 1.5% from 2.8%

The annual growth rate of Australian housing values is now tracking at the fastest pace since the year ending in June 1989, according to NAB’s most recent housing market update.

Values rose 17.6% higher over the first nine months of the year, and 20.3% higher over the past year.

Although growth conditions remain positive, it is becoming increasingly clear the housing market moved past its peak rate of growth in March when national dwelling values increased by 2.8%.

NAB housing market update: October 2021

“Since that time, the monthly rise in values has eased back to 1.5%,” said the update.

Home buyers and owners

Higher barriers for non-home owners along with fewer government incentives to enter the market are attributed to the easing.

“With housing values rising substantially faster than household incomes, raising a deposit has become more challenging for most cohorts of the market, especially first home buyers.”

Lending data has shown the number of owner occupier first home buyer loans fell by -23% between January and August.

Over the same period, the number of first home buyers who took out an investment housing loan increased by 43%.

“Existing home owners looking to upgrade, downsize or move home may be less impacted as they have had the benefit of equity that has accrued as housing values surged,” said the update.

Absorption of new listings is a key factor

Persistently low advertised supply is placing upwards pressure on housing values across the country, said NAB’s update.

Although new listings are ramping up, the trend in total active listings remains extremely low, continuing to reflect the rapid rate of absorption seen amidst high buyer demand.

CoreLogic estimates the number of dwelling sales across Australia was 25.5% higher than the five-year average and 41.9% higher year-on-year at the end of September.

“Such low levels of available supply along with high demand is keeping selling conditions skewed towards vendors.

“Nationally, homes are selling in 35 days and vendor discounting levels remain around record lows at -2.8%,” said the update.

  • Raising a deposit and funding transactional costs is challenging within some sectors of the market, particularly first home buyers
  • Potential for tighter credit conditions when it comes to home lending
  • With vaccination rates up, households may return to more normalised, pre-pandemic consumption patterns and spending, which could further ease housing demand
  • Advertised stock levels move higher

NAB housing market update: October 2021

Sydney housing market

According to the update, Sydney housing values are continuing to rise at a faster pace than the capital city average, with the market up 1.9% in September.

“The latest results take annual growth in Sydney home values to nearly 24% which was the highest annual gain since 1989.

“Although the annual growth rate is yet to peak, the monthly rate of increase has been easing since moving through a cyclical high of 3.7% in March.”

Image – Canva

Melbourne housing market

Melbourne housing market conditions have been consistently softer than the capital city average, with housing values rising 0.8% in September to be 15% higher over the year.

Despite being the lowest annual gain across capital cities, it still has the highest annual growth rate ever recorded in Melbourne since 2010.

“The unit market has been a drag on the headline growth rates, with unit values up 8.3% over the year compared with an 18% lift in house values.”

Image – Canva

Brisbane housing market

Housing values have continued to increase, rising by 1.8% in September.

Although the monthly rate of growth has eased since posting a 2.4% rise in March, there is less evidence of the market losing momentum.

“The quarterly growth rate is now the highest amongst the major capitals, with values up 5.9% over the September quarter.

“Brisbane home sales are tracking 42% higher than the five-year average for this time of year, but active listings are -33% below the five-year average.”

The update said it is clear buyer demand is continuing to outweigh advertised supply which is keeping housing market conditions skewed in favour of sellers over buyers.

Image – Canva

Adelaide housing market

Home values have continued to track higher with little evidence of a slowdown in the pace of capital gains.

“Housing values were up 1.9% in September, only slightly down from the cyclical peak rate of growth, recorded in April when values increased by 2% over the month.

“Dwelling values are up 19.1% over the past 12 months, which is the highest rate of capital gain since 2004.”

The update said market conditions remain in favour of the seller, with advertised stock levels tracking -31% below the five-year average, while the number of home sales was 44% above the five-year average in September.

Image – Canva

Perth housing market

The city’s home value index was revised higher in September reporting an 18.1% annual gain in housing values.

“The strong annual capital gain comes as the monthly rate of growth consistently eases from a high in February of 2.7% to 0.3% in September.

“The slowing of growth in housing values has occurred alongside a 10% reduction in the value of home lending since February this year, led by a 39% reduction in first home buyer lending.”

The update said stock levels remain low, tracking almost -27% below the five-year average, but new listings added to the market is now almost 7% above average as vendors take advantage of the strong selling conditions.

Image – Canva

Hobart housing market

The city remains one of the hottest capital city housing markets, with values rising a further 2.3% in September, which was the largest monthly gain across the capitals.

The September update takes Hobart dwelling values 26.8% higher over the past 12 months.

“In a deviation from the national trend, Hobart’s unit sector, where values have risen 31.1% over the past 12 months, is showing a higher rate of capital gain than houses.

“The strong unit market conditions reflect tight supply levels and strong demand for lower maintenance properties and downsizing option amidst a more mature aged demographic.”

The update said Hobart is now recording the third highest median unit value amongst the capital cities at just over $542,000.

Image – Canva

Darwin housing market

Conditions have slowed, with the monthly pace of capital gains easing from 2.7% in April and May to just 0.1% in September.

The Darwin index tends to show more volatility than other cities due to the small size.

“The trend in the value of home lending has also been easing, with the value of owner occupier lending falling -4.9% from a recent high in May. But investor interest looks to be picking up, with investors now comprising 25.3% of mortgage demand, up from a recent low where investors were only 9% of demand.

“High rental yields and a relatively low entry price to the market are likely to be a central factor in attracting more investors to the local market.”

Image – Canva

Canberra housing market

There has hardly been any disruption through the current extended lockdown.

The monthly rate of growth in dwelling values has held at 2% or higher over the past four months, with growth in house values continuing to substantially outpace growth in unit values.

“The number of home sales has also trended higher despite the lockdown conditions, with Canberra dwelling sales tracking 32% above the five-year average in September.

“Low advertised supply levels help to explain the ongoing upwards pressure, with the number of active listings remaining -31% below the five-year average, keeping market conditions in favour of sellers over buyers.”

Image – Canva
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