A lack of supply is driving the biggest lift in Australian house prices in 17.5 years as auction clearance rates reach new highs.
National housing supply remained at historically low levels, 26.2 per cent below the same time last year, while low mortgage rates, government incentives, access to capital and improving conditions attracted buyers.
This drove house prices up 2.1 per cent nationally according to the Corelogic home value index for February.
The broad-based housing market boom was the largest month-on-month change since 2003 with values increasing across each capital city and state region.
The limited number of dwellings also pushed auction clearance rates to 90 per cent in Sydney for the first time, 82 per cent in Melbourne and 73.4 per cent in Brisbane on the weekend, as seen in Auction Insider data.
February house price growth: Corelogic
^Source: Corelogic Hedonic Home Value Index, at 28 February 2021
Corelogic research director Tim Lawless said the mismatch between supply and demand is a central factor pushing prices higher.
“Housing inventory is around record lows for this time of the year and buyer demand is well above average. These conditions favour sellers,” Lawless said.
“Buyers are likely confronting a sense of FOMO [fear of missing out] which limits their ability to negotiate.
“Vendor discounting rates were estimated at a record low of 2.6 per cent in February, and auction clearance rates have consistently been in the high 70 per cent to low 80 per cent, which is well above average.”
There could be a substantial lift in listings in March with agent activity up 19.5 per cent on 2020 levels according to Corelogic.
Archistar chief economist Andrew Wilson said in Sydney the tight home auction market is likely to continue.
“Sydney’s Central Coast, North West, Northern Beaches and Upper North Shore were the top weekend auction regions, all recording clearance rates above 90 per cent,” Wilson said.
“The lowest clearance rate reported was the West with a nonetheless booming 82.1 per cent result.”
“The clearance rate for units was slightly below that reported for houses at 88.9 per cent.”
“The prospect of sharply higher prices may be encouraging vendors to hold back with signs of lower new listing growth continuing to emerge.”