Residential property prices continue to climb but the pace has slowed as more and more Australians simply can’t afford a roof over their head.
Australia’s property price boom is losing steam, new data shows, with dwelling values only inching higher last month after a stellar year of growth.
CoreLogic figures released on Monday revealed residential property prices lifted 1.6 per cent in July, taking increases over the past twelve months to 16.1 per cent.
That’s the fastest pace of annual growth since February 2004.
Research director Tim Lawless described the market as strong but losing steam, citing affordability constraints and the end of much of the earlier Covid-related fiscal support.
“The monthly growth rate has been trending lower since March this year,” Mr Lawless said.
“With dwelling values rising more in a month than incomes are rising in a year, housing is moving out of reach for many members of the community.”
But there remains an imbalance between demand and supply – a key factor placing upwards pressure on housing prices – while interest rates remain at record lows amid expectations they will stay that way for an extended period.
Canberra was the strongest market last month, rising 2.6 per cent, followed by Sydney and Brisbane at 2 per cent.
Next was Hobart, Darwin and Adelaide at 1.7 per cent, Melbourne at 1.3 per cent and trailing way behind was Perth at just 0.3 per cent.
The sharpest fall in price growth was in Sydney, which remains the nation’s most expensive capital city by some margin.
The median price is now a staggering $1.017m.
“Worsening affordability is likely a key contributing factor in the slowdown here, along with the negative impact on consumer sentiment as the city moves through an extended lockdown period,” Mr Lawless said.
The Australian Prudential Regulatory Authority last week showed owner-occupied housing lending rocketed by $13.2bn, or 1.1 per cent, in June.
National Australia Bank executive home ownership Andy Kerr said the company had its strongest month of home lending on record that month.
“Confidence in the housing market continues to improve despite the ongoing impact of the pandemic, and that shows in the amount of activity we are seeing through mortgage applications,” Mr Kerr said.
“We understand there are headwinds in slower population growth and the impact of rising house prices.
“However, we expect low rates and government programs like the First Home Loan Deposit Scheme to continue to drive a strong housing market.”
Given the competitive market, NAB aims to make “60-minute unconditional approvals the norm”, he said.
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