- House prices are rising at their fastest rate since August 2003
- All capital cities and regional areas are seeing home values rise
- A 'perfect storm' of reasons lie behind the rising market at the moment
Over the past month, Australian home values rose 2.1%, the largest monthly rise since August 2003.
Adding to the many reports of the rapidly rising property market, the latest CoreLogic Home Value Index adds context to what we are hearing all over the country: long lines of people at rental home opens, high clearance rates at auctions, properties being snapped up in quick time and low supply.
Historically low interest rates have led to a surge in lending, government stimulus packages have put cash in people’s pockets and pent up demand from a relatively quiet previous period have all come together in what appears to be a perfect storm.
It will be interesting to see what the Reserve Bank (RBA) does today with interest rates, which are probably expected to remain at 0.1%.
House prices are rising everywhere – in all major capital cities and in the regions.
“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,” said CoreLogic’s research director, Tim Lawless.
Despite being the two priciest cities, Melbourne and Sydney saw the largest increases in February, with 2.1% and 2.5% house price rises respectively. Their “relatively weak” performance in 2020 seems to be in the past.
However, smaller cities have been rising faster over the past three months, with the quarterly property price rises largest in Darwin (+5.5%), Hobart (+4.8%) and Perth (+4.2%). Perth is coming off a six-year downturn where prices fell more than 20% from 2014 through to 2020.
“Whether this new-found growth in Sydney and Melbourne can be sustained is unclear,” said Mr Lawless.
“Both cities are still recording values below their earlier peaks, however at this current rate of appreciation, it won’t be long before Australia’s two most expensive capital city markets are moving through new record highs.
“With household incomes expected to remain subdued and stimulus winding down, it is likely affordability will once again become a challenge in these cities,” he said.
As we have reported before, house prices are rising faster than units, although Sydney units recorded their first month of growth in 10 months.