Australian house prices are likely to continue to climb with the country’s most powerful banker indicating he will do nothing to prevent the market from overheating.
Real estate values in the capital rose a record 6.7 percent in the June quarter, the largest increase in three months since the Australian Bureau of Statistics began collecting data in 2003.
Prices in Canberra rose an even more dramatic 8.2 percent, while Sydney’s value rose by 8.1 percent.
Despite the lockdowns, Sydney’s real estate values have continued to rise, with median home prices rising 1.9 percent to $1,293 million in August, CoreLogic data shows.
Australian house prices are likely to continue to climb with the country’s most powerful banker indicating he will do nothing to prevent the market from overheating. Real estate values in the capital rose a record 6.7 percent during the June quarter (pictured is a house in Newport on Sydney’s northern beaches)
The Reserve Bank of Australia has previously raised interest rates to prevent the housing market from overheating.
Financial markets are speculating that spot interest rates, which are now at an all-time low of 0.1 percent, will rise in 2022 or 2023 rather than 2024.
But RBA Governor Philip Lowe urged on Tuesday that the central bank would do nothing about monetary policy as the Delta strain of Covid appeared to be causing a precipitous plunge in economic activity.
Finally, I want to talk about house prices, as some analysts have suggested that we could raise cash rates to cool the property market, he said.
“I want to make it clear that this is not on our agenda.
While it is true that higher interest rates, all else equal, would mean lower house prices, they would also lead to fewer jobs and lower wage growth.
Financial markets are speculating that spot interest rates, now at an all-time low of 0.1 percent, will rise in 2022 or 2023 instead of 2024. But Reserve Bank governor Philip Lowe insisted on Tuesday that the central bank would do nothing about monetary policy as the Delta strain of Covid appeared to cause a steep plunge in economic activity
Australia’s tight rental vacancy rates
Sydney: 2.6 percent
Melbourne: 3.5 percent
Brisbane: 1.3 percent
Perth: 0.7 percent
Adelaide: 0.6 percent
Canberra: 0.8 percent
Darwin: 0.7 percent
Hobart: 0.5 percent
Source: SQM Research, August 2021
“This is a bad trade-off in the current circumstances.”
Tenants are also struggling as the national vacancy rate in Australia fell to just 1.6 percent in August, making it the tightest market since March 2011, data from SQM Research shows.
SQM Research Director Louis Christopher said the exodus of people from Sydney and Melbourne to regional areas had increased the demand for rental housing in beachfront areas.
“There are strong signs that the current lockdowns are sparking a new wave of interest in regional real estate,” he said.
On the north coast of New South Wales, stretching from the north of Grafton to Tweed Heads on the Queensland border, weekly house rents rose 4.2 percent to $631 in just one month.
This is cheaper than $701.50 in Sydney, but more expensive than $519.30 in Melbourne and $526.50 in Brisbane.
There is demand for regional areas near capital cities, with house rents in Blue Mountains rising 6.7 percent in a month to $510 a week.
The Mornington Peninsula, southeast of Melbourne, saw a monthly increase of 8.2 percent to $489.
With Sydney, Melbourne and Canberra locked down, Dr. Lowe at the Anika Foundation on depression and adolescent suicide that the disabilities negatively impacted youth mental health.
There is demand for regional areas near capitals, with Mornington Peninsula, southeast of Melbourne, seeing a monthly increase of 8.2 percent to $489 a week (pictured is a house in Blairgowrie)
“So our young people are paying a high price,” he said.
‘This is apparent from the increasing incidence of psychological problems and the sharp increase in the demand for help.
“It is important that we remember this high price when we fully justify the costs of the pandemic and the containment measures.”
Financial comparison group Finder surveyed 40 economists, who unanimously agreed that Covid restrictions would do nothing to stop rising property prices.
On New South Wales’ north coast, stretching north from Grafton to Tweed Heads (house pictured) on the Queensland border, weekly house rents rose 4.2 percent to $631 in just one month
They forecast an 8 percent or $76,619 increase in Sydney property prices during this fiscal year, bringing the median property price for homes and units to $1,070,917 in July 2022.
Melbourne property values are expected to rise 9 percent, by $64,014 to $817,114.
Even in lockdown, consumers are less gloomy as the ANZ-Roy Morgan consumer confidence assessment rebounded 10.6 percent in Sydney last week when New South Wales Prime Minister Gladys Berejiklian announced lockdowns would end on Monday after 70 percent of people, ages 16 and older, were fully vaccinated.
Australian real estate prices rise at record level
Canberra: Up 8.2 percent in the June quarter, the largest increase in three months since the Australian Bureau of Statistics series began in the September 2003 quarter
Sydney: Up 8.1 percent, the largest quarterly increase since the June 2015 quarter and the second largest in the series
Hobart: 6.3 percent increase, largest quarterly increase since December 2003
Melbourne: An increase of 6.1 percent, the largest quarterly increase since the December 2009 quarter
Brisbane: Up 5.7 percent, strongest quarterly increase since the June 2007 quarter
Adelaide: up 5.3 percent, the largest quarterly increase since the December 2007 quarter
Source: Australian Bureau of Statistics housing prices for the June quarter