Aussie house prices up 16% in a year but are ‘losing steam’
Australia's climbing home prices keep climbing , but new CoreLogic research shows prices are tapering as housing becomes less affordable.
Aussie housing values grew another 1.6 per cent in July taking house prices up 16.1 per cent over the last 12 months.
CoreLogic's research director, Tim Lawless, described the market as strong, but losing steam.
“The 16.1 per cent lift in national housing values over the past year is the fastest pace of annual growth since February 2004, however the monthly growth rate has been trending lower since March this year when the national index rose 2.8 per cent.”
Also read: Top 10 suburbs where listings will surge
Also read: Step-by-step: The 7 stages of buying a home
Also read: $1,000,000 home trend leaving Aussies in more need than ever
Lawless attributed the lower rate of growth in housing values to the fact that home prices rose more in a single month than incomes rose in a year.
“Housing is moving out of reach for many members of the community. Along with declining home affordability, much of the earlier COVID-related fiscal support (particularly fiscal support related to housing) has expired,” Lawless said.
“It is, however, encouraging to see additional measures being rolled out for households and businesses as the latest COVID outbreak worsens.”
Lawless said on the flip side, demand is being stoked by record low mortgage rates and the fact that interest rates are expected to stay low for a prolonged time.
“Dwelling sales are tracking approximately 40 per cent above the five-year average while active listings remain about 26 per cent below the five-year average,” Lawless said.
“The mismatch between demand and advertised supply remains a key factor placing upwards pressure on housing prices.”
Housing affordability
The CoreLogic research found that price increases are slowing across all Australian capital cities.
Sydney has recorded the sharpest reduction, with the monthly gain falling from 3.7 per cent in March to 2 per cent in July.
“Sydney is the most expensive capital city by some margin and it has also been the city where values have risen the most over the first seven months of the year,” Lawless said.
“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.”
Although the pace of growth has slowed, housing values continue to rise at a rate that is well above average across most areas of the country.
Additionally, the previously stronger performance in regional markets as Aussies move from the capital cities has stabilised.
Follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter, and subscribe to the free Fully Briefed daily newsletter.
