- National dwelling values increased 1.5%; still well above average
- This is the lowest growth since January and a far reach from the March peak
- CoreLogic's Tim Lawless attributes the moderating growth to worsening affordability constraints
While national dwelling values rose a healthy 1.5% in August, the housing boom is continuing to lose steam according to CoreLogic.
Despite ongoing disruption from various Covid related restrictions, the growth rate of dwelling values was comfortable above average. It must be noted however that this growth is the smallest since January.
The August results show that house prices are beginning to moderate after reaching the peak in March. At the peak of the boom, home values had risen 2.8% in a month.
CoreLogic Director Tim Lawless believes that while lockdowns are a contributing factor, the ebbing growth is more related to worsening affordability constraints.
“Housing prices have risen almost 11 times faster than wages growth over the past year, creating a more significant barrier to entry for those who don’t yet own a home.”
Tim Lawless, CoreLogic Director
“Lockdowns are having a clear impact on consumer sentiment, however to date the restrictions have resulted in falling advertised listings and, to a lesser extent, fewer home sales, with less impact on price growth momentum.
“It’s likely the ongoing shortage of properties available for purchase is central to the upwards pressure on housing values.”
Looking at the broader picture, the August results show home values have increased 15.8% so far in 2021. The values have risen 18.4% above the same time a year ago.
Month-on-month change in dwelling values
The current annual growth rate is the highest since the year to July 1989, according to Mr Lawless.
“Through the late 1980s, the annual pace of national home value appreciation was as high as 31%, so the market isn’t quite in unprecedented territory. The annual growth rate at the moment is trending higher, in fact, it is 3.6 times higher than the thirty-year average rate of annual growth,” he said.
