Australian house prices grow at fastest rate since 2004 but could be coming off the boil | Housing

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Australian residential property prices grew at their fastest annual rate since 2004 in the 2020-21 financial year – although there are early signs that momentum is coming off the boil.

The CoreLogic home value index rose 1.9% in June to be 13.5% up on a year ago, with prices rising in all capital cities.

Over the year, house prices rose 15.6% compared to units, which increased by 6.8%.

Darwin posted the highest annual increase in dwelling values, jumping by 21%, followed by a 19.6% rise in Hobart.

CoreLogic’s head of research, Eliza Owen, said many factors drove the housing market through the first six months of 2021 before recent uncertainty caused by growing Covid cases across the country.

“There are some markets where performance is starting to ease more notably,” Owen said.

Continued low mortgage rates, falling unemployment, elevated consumer confidence, the accumulation of savings through the Covid restrictions last year and relatively low advertised housing stock all fuelled strong demand conditions.

Federal government initiatives such as the first home loan deposit scheme and the new home guarantee had also been supportive.

The government had released an additional 30,000 places from 1 July under these two schemes, as well as the new family home guarantee to eligible single parents with children to build a new home or purchase an existing home with a deposit of as little as 2%.

“Our data shows CBA customers who have used one of these homebuyer initiatives have been able to enter the property market nearly five years earlier on average than they would if they saved for the standard 20% deposit,” Commonwealth Bank’s Michael Baumann said.

However, the CoreLogic data showed there was a loss of momentum across Perth and Darwin, while softer growth rates were also emerging at the high end of the market.

“The rest of the market tends to follow movements at the high end and this is the first time in nine months that the high-tier growth rate has not accelerated,” Owen said.

The AMP Capital chief economist, Shane Oliver, expected further price gains of 20% over 2021 but this could be threatened by coronavirus outbreaks and snap lockdowns in various cities.

“But providing the lockdowns are relatively short, then the experience from the eight previous snap lockdowns around Australia since November, including that recently in Victoria, suggests it won’t be enough to derail the housing market upswing,” Oliver said.

He was expecting financial regulators to step in with macro-prudential controls to slow home lending in the coming months.

CoreLogic national home value index for June

(month, annual)

National – up 1.9%, up 13.5%

Sydney – up 2.6%, up 15%

Melbourne – up 1.5%, up 7.7%

Brisbane – up 1.9%, up 13.2%

Adelaide – up 1.6%, up 13.9%

Perth – up 0.2%, up 9.8%

Hobart – up 3%, up 19.6%

Darwin – up 0.8%, up 21%

Canberra – up 2.3%, up 18.1%

Combined capitals – up 1.9%, up 12.4%

Combined regional – up 2%, up 17.7%

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