House prices across the country have continued their strong run of increases closing the financial year 13.5% higher.
After widespread talk of doom and gloom in early 2020 on the back of widespread lockdowns, house prices across the country have clearly proven the so-called experts wrong.
The latest data from CoreLogic showed that dwelling values across the nation rose 1.9% in June marking yet another strong month for property prices.
Once again, much of the strength came from the upper end of the market with Sydney house prices growing by 2.6%, adding to what is now an 8.2% in three months. Hobart was the other strong performer last month, seeing a 3.0% increase in house prices.
All of the major capital cities and regional areas increased in price last month, marking an impressive year around the country.
In the last 12 months, Darwin house prices bounced back from a long period of decline recording a gain of 21% making it the strongest market in the country. While Canberra and Hobart both gained, 18.1% and 19.6% respectively over that same period of time.
While markets remain bullish, there is clearly a loss of momentum across Perth and Darwin. For Perth dwellings, the monthly growth rate in values had averaged 1.4% between January and May 2021 but fell to 0.2% through June. Across Darwin, the monthly growth rate in dwelling values averaged 2.1% between January and May but was just 0.8% through June.
While it appears that the momentum is starting to slow down in certain areas and segments of the property market we’re still seeing a clear move towards houses over units - particularly at the higher end.
Notably, house prices in Sydney are up 19.3% over the past 12 months compared to a rise of just 8.7% for units. The trend is similar across all the capital cities as well as homebuyers look for more space, with many attempting to work from home and forced to endure long periods of lockdown - especially in Victoria and NSW.
Head of Research at CoreLogic, Eliza Owens, believes that there are still plenty of fundamental factors driving the market at this time.
“Before the recent uncertainty of growing COVID-19 case numbers, there were plenty of demand-side factors driving housing market growth through the first half of 2021.”
“In May, the unemployment rate fell to 5.1%, and the underutilisation rate fell to 12.5%, the lowest level since February 2013. Consumer confidence remained elevated through June, although down from the recent April highs. Elevated savings accumulated through COVID-restrictions last year, along with a more confident consumer sector, has encouraged consumption of larger goods, such as housing.”
“This has all occurred against a backdrop of continued low mortgage rates, which is one of the most significant demand drivers.”
While price growth might be slowing down in some areas, Ms Owens believes that low stock levels will continue to keep house prices buoyant.
“The latest listings count from CoreLogic indicates that in the 28 days to June 27th, total advertised stock remained 24.4% below the five-year average. This dynamic of strong consumer demand, and low housing supply, continues to create some urgency among buyers.”
New listings have risen alongside prices, but total stock on the market remains low. CoreLogic estimates that there were approximately 126,320 fresh listings advertised for sale in the three months to June, 7.9% above the previous five-year average for the June quarter. However, in the same period, there were 167,450 sales nationally. This shows there was more than one sale for every new listing added to the market.
While the last 12 months have been incredibly strong with the housing market showing just how resilient it truly is, it’s clear that momentum is slowing.
CoreLogic notes, that with high house pieces and the continued impact of lockdowns on transactions and on employment, it will be difficult to sustain the current level of house price growth.
Looking forward, with looming rises in interest rates and affordability issues still a factor, while house prices will still likely continue to grow, it’s unlikely that they will be able to maintain the current momentum headed into 2022.