New data from CoreLogic shows that May is another big month for real estate with a 2.2% surge in the national Home Value Index report released on Tuesday.
Among the top-performing cities, Hobart gained the highest lift this month with 3.2%, despite the unprecedented rise in property prices in the area, which set a new benchmark at $574,543. It can be observed, too, that all values were up by more than 1% across each capital city over the month.
CoreLogic’s Research Director, Tim Lawless, explained the factors contributing these figures. “The combination of improving economic conditions and low interest rates is continuing to support consumer confidence which, in turn, has created persistently strong demand for housing. At the same time, advertised supply remains well below average. This imbalance between demand and supply is continuing to create urgency amongst buyers, contributing to the upwards pressure on housing prices.”
This month’s data improved compared with April where a 1.8% lift was seen in general, but the 32-year high surge recorded in March is still the strongest with 2.8%. This does not invalidate the fact that out of 334 SA3 sub-regions analysed by CoreLogic, the recorded surge in housing values went up to 97% over the past three months. “Such a synchronised upswing is an absolute rarity across Australia’s diverse array of housing markets,” said Mr. Lawless.
Mr. Lawless mentioned the major shift he observed over the past year, whereas before, the strongest in the market was the most affordable side, but now, across most of the capital cities, the most expensive end of the market is driving the highest rate of price appreciation.
“From a geographic perspective, it was the smaller capital cities that led the housing market out of the COVID slump, but now, Sydney has risen through the ranks to record the largest capital gain over the past three months with values up 9.3%.”
Melbourne, on the other hand, garnered the least increase in home values in an annual perspective with 5.0% change in dwellings. Additionally, it is the only capital city with higher total listing numbers than the five year average. “Total listings were tracking 6.4% above the five-year average in late May, largely attributable to a 29.1% increase in unit listings over the past year. Melbourne’s house listings are down -0.2% over the same period, and remain below average.”
Despite the good news in the figures this month, the rise in property prices will continue to more likely impact first home buyers, among the other sectors in the market, for the coming periods. The Real Estate Institute of Australia (REIA) President Adrian Kelly said that the number of home buyers decreased to 44,007–a fall of 4.4% during the quarter.
The REIA Housing Affordability Report found out that the overall housing affordability across Australia has declined with the proportion of income required to meet loan repayments increasing to 34.7%–a rise of 0.1% over the past 12 months.
“Over the March 2021 quarter, the number of first home buyers decreased in Victoria, South Australia, and Western Australia, but decreased in all other states and territories. Over the past 12 months, the number of first home buyers increased in all states and territories, ranging from 37.3% in Tasmania to 105% in Western Australia,” Mr. Kelly explained.
Investors, as stressed by Mr. Lawless, on the other hand, will constantly scale up their activity across the market. “The resurgence of investor participation and high levels of activity in the owner-occupier non-first home buyer segment may account for the continued strength in dwelling markets despite affordability constraints.”
According to CoreLogic, housing values are still expected to boom all throughout 2021 and into 2022 even if worsening affordability issues are in place. From then, our team at 4one4 Property Co. will still be committed to our promise of providing all types of properties, for all types of people.
