The fastest-ever housing market rebound has played an ‘integral’ role in Australia’s ongoing post-pandemic recovery.
CoreLogic’s latest Economic and Property Review said the $9.4 trillion housing sector has boosted the current economic landscape as home prices rise in regional areas and capital cities.
National home values were up 22.2% in the year to November, with regional markets showing a 25.2% growth rate superior to capital’s 21.3%.
Over the same period, 613,635 homes across the country found new owners, the highest annual sales volume since December 2003.
Eliza Owen, chief of research at CoreLogic, said these recent housing indicators were likely the result of government support, low interest rates that lowered mortgage costs and limited supply that intensified competition with buyers.
“Housing-related government aid such as the First Home Loan Deposit and HomeBuilder schemes and non-housing tax incentives such as JobKeeper have helped many Australians cover their housing costs, such as rent and mortgage payments,” she said.
Institution-led support, in particular deferral of mortgage interest relief, also helped struggling households, avoiding sales difficulties during the year.
Meanwhile, the report also noted the significant increase in Australian household savings, which rose to 23.6% through June 2020, above the decade average of 6.9%.
“Lower mortgage rates and a perceived recovery in the economy and housing market from late 2020 is likely to have contributed to buoyant housing demand, especially in cities hit by lockdowns in 2021,” said Ms Owen.
However, Ms Owen acknowledged that housing momentum is now slowing, particularly in Sydney and Melbourne.
These two markets have witnessed a surge in new listings, helping to ease the affordability constraints caused by the rise in prices.
“Across Melbourne, demand appears to be shifting to more affordable parts of the city, with lower-value housing markets seeing a rebound in quarterly growth rates,” said Ms Owen.
“Similarly, appreciation in regional NSW is accelerating as affordability weighs on housing demand in Sydney.”
Brisbane and Adelaide are also witnessing growth rates reaching new highs in more than a decade.
In the ACT, investor activity continues to increase as the concentration of housing demand has shifted to the unit sector.
Ms Owen believes that while the markets’ robust performance over the past year has been impressive given the pandemic, it is likely to be unsustainable, mainly due to likely credit constraints and an imminent hike in cash interest rates.
“Supply levels are normalizing in Sydney and Melbourne, and affordability constraints are worsening in most housing markets,” she said.
“As a result, Australian housing values are expected to be much milder by 2022.”
Photo by Hayden on Unsplash.
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