Once again, the smaller capital cities of Canberra and Hobart lead the house, gaining in value by 2.3% and 2.2%, respectively. While Brisbane also continues to perform enormously, increasing by 2.0% in August. Australia’s two largest cities face the most obstacles in the form of ongoing . However, they saw another month of growth, with Sydney dwelling values increasing by 1.8% and Melbourne by 1.2%. While the annual cities has been impressive, we are also starting to see that monthly rate fall from the highs of earlier in the year.
Looking back to March 2021, we saw growth of 2.8% across the country, led by Sydney, where dwelling values were up 3.7%. While change is still positive, we will nowdevelopment, particularly in our most expensive cities, where affordability is already an issue. Head of Research at CoreLogic, Tim Lawless, believes worsening affordability is causing more of an impact than the ongoing lockdowns.
“Lockdowns are having a clear impact on consumer sentiment; however, to date, the restrictions have resulted in falling advertised listings and, to a lesser extent, fewer home sales, with less impact on themomentum. The ongoing shortage of properties available for purchase is likely central to the upward pressure on housing values.” According to Tim Lawless, the growth in housing values has been the strongest since 1989, which interestingly coincided with a period of record inflation. “Through the late 1980s, the annual pace of national home value appreciation was as high as 31%, so the market isn’t quite in unprecedented territory. The annual growth rate is currently trending higher; it is 3.6 times higher than the thirty-year average annual growth rate.”
Listings Remain Tight
One of the major sources of upward pressure on houseto be the low levels of stock on the market. COVID-19 in early 2020, and those prior levels have never really recovered. Thanks predominately to lockdowns, the number of new listings through August dropped -5.8% below the five-year average, and total active listings were -29.4% below average. While listings are lower, Mr. Lawless says transactions are still occurring.
With spring arriving, we would typically see new listing numbers starting to rise dramatically, and there is some evidence of thisin Brisbane, Adelaide, Perth, and Hobart. However, the same cannot be said for the cities where . The trend in new weak in Sydney, Melbourne, and Canberra. When lockdowns do ease in these cities, there is likely to be a and reduce the pressure to some degree. With record-low interest rates and no sign of any changes ahead from the RBA, we are still likely to see continue to drift higher.