Over the past year,the strongest market is Darwin,where house values are up by 21.1 per cent,one of the fastest annual rates in the developed world. The second strongest is Canberra with values up by 17.7 per cent.
CoreLogic’s research director Tim Lawless said a perfect storm of influences was driving up prices.
CoreLogic’s Tim Lawless says low supply,strong consumer confidence and low interest rates are helping drive up prices.Credit:Janie Barrett
“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,” he said.
“At the same time,advertised supply remains well below average. This imbalance between demand and supply is continuing to create urgency among buyers,contributing to the upward pressure on housing prices.”
The strong market has resulted in the number of days a property remains up for sale falling to an all-time low of fewer than 30 days. The median discount offered by sellers has also dropped to its smallest level on record.
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A continuing issue is the low number of properties on the market.
Mr Lawless said the total number of properties up for sale is about 24 per cent below its long term average. The only city where listings are higher than their long term average is Melbourne.
AMP Capital chief economist Shane Oliver said home prices could climb another 10 to 15 per cent by the end of next year.
“The fundamentals of still ultra-low mortgage rates,ongoing government incentives with HomeBuilder ended but first-home loan deposit schemes expanded,economic recovery,the strong jobs market and FOMO[fear of missing out] point to further home price increases ahead,” he said.
But Dr Oliver said the market was likely to correct from 2023 as issues including poor affordability,especially for first time buyers,tighter lending standards,slow population growth and a lift in fixed interest rates started to curb prices growth.
Westpac senior economist Matthew Hassan said he expects price gains to moderate with a total national increase of 15 per cent for all of 2021.
“Affordability will become more of a restraint as the year progresses with macro-prudential tightening expected to see a further slowing in momentum next year,” he said.
The data was released ahead of the Reserve Bank board’s monthly meeting at which theofficial cash rate was held at 0.1 per cent.
Bank governor Philip Lowe said despite the economy recovering faster than expected,the RBA still believed it would not lift interest rates until inflation was within its 2-3 per cent target band.
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Figures from the Australian Bureau of Statistics to be released on Wednesday are expected to confirm the strength of the economic recovery.
The March quarter national accounts are predicted by some analysts to show the economy expanding by 2 per cent through the first three months of the year. That would mean the economy had fully recovered all the lost output caused by the pandemic recession.
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