Australia's pandemic property boom continues its upwards trajectory, with the latest figures revealing housing values rose in November for the 14th month in a row.
Property values have climbed more than 20 per cent over the year nationally, adding approximately $126,700 to the median value of an Australian home.
But the market is losing steam. Although housing values continued to rise in November – nationally, they're up by 1.3 per cent – the November result was the softest outcome since January, CoreLogic's latest national home value index revealed.
Across Sydney and Melbourne, conditions have slowed sharply with the sudden rise in new listings and affordability pressures taking their toll.
Sydney housing values rose 0.9 per cent over the month, while Melbourne by 0.6 per cent – a far cry from the massive rises in March this year when prices soared by 3.7 per cent in Sydney and 2.4 per cent in Melbourne.
CoreLogic research director Tim Lawless said the slowdown in the pace of growth was due to a number of reasons.
“Virtually every factor that has driven housing values higher has lost some potency over recent months. Fixed mortgage rates are rising, higher listings are taking some urgency away from buyers, affordability has become a more substantial barrier to entry and credit is less available,” he said.
But the boom was far from over, Mr Lawless said.
“The heat's come out of the market but it's still a hot market,” he said. “The boom isn't over. Even in Melbourne and Sydney, where it's slowed, you're still seeing values rise 1 per cent in a month.
“Even though the market has slowed, the rate is still well above average. If you're looking at the marketplace in Sydney, that 1 per cent [rise] is still nearly a $10,000 increase in a month.”
The fastest-growing property markets in Australia are now in Brisbane and Adelaide, where housing values are rising rapidly. They are the only capital cities yet to experience a slowdown.
Brisbane's home values hit a cyclical high, rising by 2.9 per cent in November. That's the fastest rate of growth for the river city in 18 years, adding $18,500 to the cost of a property in just one month.
Adelaide values rose 2.5 per cent, which equates to a rise of $13,500 – the highest rise since February 1993.
“Relative to the larger cities, housing affordability [in Brisbane and Adelaide] is less pressing – there have been fewer disruptions from COVID lockdowns and a positive rate of interstate migration is fuelling housing demand,” Mr Lawless said.
“On the other hand, Sydney and Melbourne have seen demand more heavily impacted by affordability pressures and negative migration from both an interstate and overseas perspective.”
Different supply dynamics are also creating divergent trends across Australian capital cities. In the four weeks to November 28, the total stock available for sale across Adelaide was 32 per cent lower than the five-year average, and 33.9 per cent lower across Brisbane.
Across Sydney and Melbourne however, stock levels have become far more normalised in recent weeks, with Sydney total listings sitting just 2.6 per cent below the five-year average, while stock levels across Melbourne are 7.9 per cent above the five-year average.
Mr Lawless said he expected new listings would continue to rise into the new year, which would be a key factor driving the slowdown in capital growth.
“It's no surprise that those cities where stock levels are starting to rise faster, buyers are getting more leverage and getting more choice,” he said.
Houses have continued to outperform units, with capital city values up 1.2 per cent and 0.7 per cent respectively over the month.
Based on median values, capital city houses are now 37.9 per cent more expensive than capital city units – the largest difference on record. In dollar value terms, a capital city house is averaging approximately $240,500 more than a capital city unit. In Sydney, where the gap between house and unit values is the widest, a house costs $523,000 more on average than a unit.
“With such a large value gap between the broad housing types, it's no wonder we are seeing demand gradually transition towards higher density housing options simply because they are substantially more affordable than buying a house,” Mr Lawless said.
Heading into 2022, Australia's property markets would continue to rise, albeit at a milder rate, he said.
“The market still has somewhere to go before prices start falling. The cue for the market to go down is when rate rises happen,” Mr Lawless said.
“My guess is through 2022, the rate of growth will gradually ease off but prices will probably still rise.
“Importantly, there's going to be more diversity in the results. It's not going to be every market recording double-digit annual growth – that will be the exception to the rule.”
* Source - Domain - Ellen Luton *