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Australian housing values continued to record a broad-based rise despite the disruption from lockdowns. According to CoreLogic’s national home value index, dwelling values rose 1.5% in August; a rate of growth that is still well above average, but the lowest monthly rise since January.
The lift in housing values continues to be broad-based, with every capital city, apart from Darwin (-0.1%) recording a rise in values throughout the month, although it is important to note CoreLogic has withheld the Perth and Regional WA index results pending the resolution of a divergence from other housing market measurements in WA.
The August home value index provides further confirmation that the rate of price growth is moderating after moving through a peak in March of this year. At that time, national home values had risen 2.8% in a month, led by Sydney where dwelling values were up 3.7%. According to CoreLogic's research director, Tim Lawless, the slowing rate of growth probably has more to do with worsening affordability constraints than ongoing lockdowns.
“Housing prices have risen almost 11 times faster than wages growth over the past year, creating a more significant barrier to entry for those who don’t yet own a home. Lockdowns are having a clear impact on consumer sentiment, however to date the restrictions have resulted in falling advertised listings and, to a lesser extent, fewer home sales, with less impact on price growth momentum. It’s likely the ongoing shortage of properties available for purchase is central to the upwards pressure on housing values.”
The August update takes Australian housing values 15.8% higher over the first eight months of the year and 18.4% above levels a year ago. In dollar terms, the annual increase in national dwelling values equates to approximately $103,400, or $1,990 per week. In comparison, Australian wages are rising at the average annual rate of 1.7%.
Index results as at August 31, 2021
Note hedonic indices for Perth and WA have been temporarily withdrawn while we investigate a divergence from other housing market measurements. Aggregate indices (combined capitals, combined regional and national) include a relatively small weighting from WA, therefore please make some allowance for this information in your interpretation until the issue is resolved.
According to Tim Lawless, this is the fastest annual pace of growth in housing values since the year ending July 1989. “Through the late 1980’s, the annual pace of national home value appreciation was as high as 31%, so the market isn’t quite in unprecedented territory. The annual growth rate at the moment is trending higher, in fact, it is 3.6 times higher than the thirty-year average rate of annual growth.”
Capital city houses are continuing to record a stronger growth rate relative to units, however the performance gap does appear to be narrowing. Throughout the first quarter of the year, capital city house values were rising approximately 1.1 percentage points faster than units each month. By August the average performance gap reduced to 0.7 percentage points. Mr Lawless believes the convergence of growth in house values and unit values could be another demonstration of affordability becoming more challenging.
CoreLogic Australia