All signs point to the notion that Australia’s housing market is in the midst of a broad-based boom with the national home value surging 2.1% higher in February; the largest month-on-month increase since 2003.
The February surge, as reported by CoreLogic’s national home value index, was spurred on by record low interest rates, improving economic conditions, government incentives and low stock levels.
What areas experienced growth?
Maybe the correct question is, ‘What areas didn’t experience growth?’
Dwelling prices rose in every part of Australia – capital cities and rest-of-state regions included. This highlights the unusual and diverse nature of the housing upswing we’re experiencing right now.
According to CoreLogic’s research director Tim Lawless, a synchronised growth phase like this hasn’t been seen in Australia for more than a decade.
“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 fuelled buyer demand,” says Mr Lawless.
How did your region perform?
Sydney and Melbourne were among the strongest performing markets, recording a 2.5% and 2.1% lift in home values over the month respectively.
The smaller cities showed stronger growth though. Darwin house prices were up 5.5% over the past three months, Hobart up 4.8%, Perth by 4.2% and Canberra up 3.7% respectively.
Mr Lawless says whether Sydney and Melbourne can sustain their new found growth is yet to be determined.
“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,” he adds.
“With household incomes expected to remain subdued and stimulus winding down, it is likely affordability will once again become a challenge in these cities.”
New home lending is up, cash rate remains on hold
If you’re a soon-to-be-borrower or someone looking to refinance, there were two other interesting pieces of news this week that are definitely worth noting.
First, the latest figures from the Australian Bureau of Statistics show the value of new home lending hit $28.75 billion in January, up a whopping 44% from the same time a year earlier in seasonally-adjusted terms.
According to the ABS, that’s a record high and is reflective of the record low interest rates currently available. (It also explains why we’re so busy and lenders are taking much longer to assess applications!)
Also earlier this this month, the Reserve Bank of Australia (RBA) kept the official cash rate on hold at 0.1% following their March meeting.
Whilst the RBA Governor Philip Lowe once again stated that he doesn’t believe that the economic conditions required to increase the cash rate will be met until at least 2024, there are increasing numbers of economists and market commentators suggesting Lowe may be forced into a change of heart if APRA doesn’t do something to help cool the booming property market.
*This post was published on 4 March 2021
