While the staggering pace of property price growth slowed last month, it’s still the fastest surge in dwelling values since mid-1989.
Residential property prices keep climbing and while the pace has slowed, experts predict there’s still steam left in the booming market.
CoreLogic data released on Wednesday showed dwelling values rose 1.5 per cent in August, a rate of growth that is still well above average but the lowest monthly rise since January.
It takes Australian housing values 18.4 per cent above levels a year ago – the fastest annual pace of growth since the year ending July 1989.
In dollar terms, the surge equates to about $103,400, while Australian wages are only rising at the average annual rate of 1.7 per cent.
Research director Tim Lawless said the slowing rate of price appreciation probably had more to do with worsening affordability constraints than ongoing lockdowns.
“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,” he said.
“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.”
Median dwelling values in Sydney remain the highest in the nation at $1.039m (up 20.9 per cent in the past year), followed by Canberra at $816,644 (up 22.5 per cent) and Melbourne at $769,968 (up 13.1 per cent).
Excluding Perth, which does not appear in this month’s CoreLogic update while the group investigates “a divergence from other housing market measurements”, the cheapest median price for residential property is in Darwin at $489,248 (up 22 per cent).
Unprecedented policy stimulus, rock-bottom interest rates and the eventual economic recovery supported continued price appreciation, CommSec senior economist Ryan Felsman said.
“Prolonged lockdowns in Sydney and Melbourne and virus flare-ups elsewhere are likely to slow the rapid pace of home price growth in the remaining months of 2021,” he said.
“But Commonwealth Bank economists still expect national home prices to lift at least 20 per cent in 2021, with house prices 24 per cent higher and apartments up 9 per cent over the year,” Mr Felsman said.
“National home price growth is expected to slow to around 7 per cent in 2022, led by gains of 10 per cent in Brisbane and 9.0 per cent in Canberra.”
ANZ senior economists Felicity Emmett and Adelaide Timbrell recently bumped up their growth forecasts for property prices across Australia’s capital cities this year to just over 20 per cent from between 15-20 per cent previously.
Meanwhile, housing affordability advocacy group Everybody’s Home said rents had jumped by 8.2 per cent over the 12 months to August 31 – the biggest spike since 2008 – and once again called for more social housing.
Originally published as Home prices jump at fastest annual rate in 32 years
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