Confidence in the property market is encouraging more people to buy a home as the number of new dwellings increases faster than the population.

Capital city house prices hit record highs, up 4.5 per cent on last year, as low interest rates, increasing jobs and government incentives drive the residential sector.

Prices are up 0.8 per cent for the September quarter to an average of $689,500 according to the latest Australian Bureau of Statistics results.

Melbourne is the only capital city to record a negative growth rate, down 0.3 per cent however the Covid-stricken city is still up 4.7 per cent compared to September 2019.

Residential property prices

^Source: Australia Bureau of Statistics - Quarterly Results September 2020

Commsec chief economist Craig James said consumers have the confidence to borrow and spend.

“There are just over 10.62 million homes in Australia and around 2.44 people per home,” James said.

“The number of homes is growing at a slightly higher annual rate than Australia’s population.

“The interest point over the next year will be whether the average household size increases or decreases.

“Younger Aussies may take advantage of first home owner grants and low interest rates and build homes. But other families may opt for greater cohabitation.”

ABS head of statistics Andrew Tomadini said the results, particularly for Sydney and Brisbane, are in line with housing market indicators.

“New lending commitments to households, auction clearance rates and sales transactions all improved during the September quarter,” Tomandini said.

“Property prices continued to fall in Melbourne in the September quarter, due to the impacts of Covid-19 restrictions.”

The total value of Australia’s 10.6 million residential dwellings rose by $87.8 billion to $7.28 trillion in the September quarter 2020.