The Reserve Bank of Australia “is prepared to be patient”, keeping interest rates at an all-time low as the housing market value rises faster than ever, hitting $9 trillion in record time.
The value of Australia’s residential homes increased by $1 trillion in the past six months, It took 15 months for the previous trillion to be reached, in March 2021, according to the latest Australian Bureau of Statistics results.
NSW homes accounted for 40 per cent of the total with median prices increasing to a record $1.1 million.
Residential property prices rose 5 per cent in the September quarter, house prices were up 5.7 per cent, and attached home prices rose 3.1 per cent.
The ABS results were revealed just as the Reserve Bank of Australia announced it would maintain the cash rate target, as expected.
Total value of residential stock in Australia
^Source: ABS, September 2021 results
ABS head of prices statistics Michelle Marquardt said that for the past 12 months all capital cities had set records or reached growth rates not seen in many years.
“The September quarter results were consistent with housing market conditions,” Marquardt said.
“Continued solid growth in residential property prices was supported by record low interest rates, strong demand and low levels of stock on the market.”
RBA governor Philip Lowe said they were prepared to be patient and wait until it was suitable to increase the rate.
“The board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range,” Lowe said.
“This will require the labour market to be tight enough to generate wages growth that is materially higher than it is currently.”
Residential property prices rise
| Location | June to Sept Quarter 2021 | Annual change to Sept |
|---|---|---|
| Weighted average | 5.0% | 21.7% |
| Sydney | 6.2% | 25.4% |
| Melbourne | 3.6% | 19.5% |
| Brisbane | 6.1% | 19.7% |
| Adelaide | 5.9% | 19.0% |
| Perth | 2.0% | 15.7% |
| Hobart | 8.2% | 25.7% |
| Darwin | 1.6% | 13.7% |
| Canberra | 6.0% | 25.2% |
^Source: ABS, September 2021 results
House price increases have started to slow across capital cities and the total value of housing loan commitments has reduced despite a new-found appetite for property from investors.
“Housing credit increased by 6.7 per cent over the past year, but, more recently, the value of housing loan commitments has declined from high levels,” Lowe said.
“With interest rates at historically low levels, it is important that lending standards are maintained and that borrowers have adequate buffers.”
However, a change in interest rates is not likely to affect residential prices with values increasing despite multiple cash rate rises in the past 25 years.
Instead, affordability was expected to be the major constraint on prices with the Brisbane market absorbing a considerable population escaping Sydney and Melbourne prices.
