Signs Housing Boom Slowing as Listings Retreat


Despite the latest Covid-19 lockdowns taking some momentum out of the housing market, Australian home values have finished the financial year up 13.5 per cent.

Corelogic’s monthly home price index rose by 1.9 per cent in June. It was the ninth time a rise was recorded.

Hobart led the capitals with a 3 per cent lift, with rises of 2.6 per cent in Sydney and 2.3 per cent in Canberra.

June’s figures lifted the annual growth rate to 13.5 per cent, led by Darwin, which increased by 21 per cent in value for the financial year, followed by Hobart, up 19.6 per cent.

Growth in home values was led by houses, up 15.6 per cent for the year, compared to a 6.8 per cent lift in unit values.

The boom in house prices was highlighted in Sydney, where average house prices are now up 20.5 per cent in the past six months—the fastest six month increase in the city since 1988.

Corelogic index results as at June 30, 2021

MonthQuarterAnnualMedian value
Sydney 2.6%8.2%15.0%$994,298

^Source: Corelogic

“That is the strongest annual rate of growth recorded nationally since April 2004 when the early 2000’s housing boom was winding down after a period of exceptional growth,” Corelogic head of research Eliza Owen said.

“However, there are some markets where performance is starting to ease more notably.”

The latest listings count from Corelogic found that during June, total advertised stock remained 24.4 per cent below the five-year average.

“This dynamic of strong consumer demand and low housing supply continues to create some urgency among buyers,” Owen said.

Despite another month of strong gains, Owen said, there are signs that some heat is coming out of the market.

The monthly change in June was well above the decade average of 0.4 per cent, however, June’s growth rate was down three basis points from May, and nine basis points from a recent peak in March.

The only capital city with a further increase in the monthly growth rate was Canberra, where dwelling values were 2.3 per cent higher for June, compared to a 1.7 per cent gain in May.

All capital city prices are now at record levels, except for Perth and Darwin which are still recovering from 22 per cent and 33 per cent falls respectively between 2014 and 2020 in the aftermath of the mining investment boom.

“The key to understanding the softer performance in these resource-based markets, such as Perth and Darwin, may be a slightly different supply-demand dynamic compared to the other capital cities and regions,” Owen said.

“For Perth dwellings, the monthly growth rate in values had averaged 1.4 per cent between January and May, but fell to 0.2 per cent through June.

“In Darwin, the monthly growth rate in home values averaged 2.1 per cent between January and May, but was just 0.8 per cent through June.”

AMP Capital chief economist Shane Oliver said the slowing in price gains from their peak in March was consistent with some slowing in auction clearance rates in recent months, as evident in the next two charts.

“The slowing in price gains and clearances likely reflects a combination of deteriorating affordability and a bottoming in fixed mortgage rates,” Oliver said.

“However, home price gains and clearance rates along with sales all remain very strong and housing finance commitments at record highs suggest more demand to come.”

Despite the slowdown, combined average capital city prices are still 9.9 per cent above their previous record high in September, 2017, and they are now up 14.1 per cent from their recent low of September, 2020.

The Reserve Bank of Australia (RBA) recently said that policymakers needed to keep a close eye on lending standards and acknowledged that higher prices would likely have a positive flow-on effect for household consumption.

The RBA has previously made clear it would not intervene to curtail surging house prices, which it said was better addressed using other policies.

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