Australian home prices motored ahead in July even as a coronavirus lockdown in Sydney curbed auctions, though stretched valuations could make affordability more of a drag in the longer term.
Data from property consultant CoreLogic out on Monday showed national home prices climbed 1.6% in July from June, when they rose 1.9%. Prices were up 16.1% on last year, the fastest annual pace since 2004, with houses surging 18.4% amid a pandemic-driven shift to working from home.
A lockdown did nothing to stop Sydney gaining another 2.0% in the month, to be up 18.2% on a year ago. Melbourne added 1.3%, Brisbane 2.0% and Adelaide 1.7%. Prices across the major cities grew 1.6% in July, while the regions rose 1.7%.
“Dwelling sales are tracking approximately 40% above the five-year average while active listings remain about 26% below the five-year average,” said CoreLogic’s research director, Tim Lawless.
“The mismatch between demand and advertised supply remains a key factor placing upwards pressure on housing prices.”
The red-hot market has provided a huge windfall to consumer wealth and confidence. The Australian Bureau of Statistics estimates the value of homes rose a record A$450 billion in the March quarter alone to reach A$8.3 trillion ($6.09 trillion).
However, with the average home in Sydney now above A$1 million prices were looking stretched.
“With dwelling values rising more in a month than incomes are rising in a year, housing is moving out of reach for many members of the community,” said Lawless.
Buyers have still been encouraged by the outlook for super-low borrowing costs, with the Reserve Bank of Australia (RBA) saying rates were likely to remain at just 0.1% until 2024.
Regulators, however, have been warning banks not to loosen lending standards and analysts suspect they could tighten loan rules later this year if the market stays this hot.
