House prices have continued to rise across the country, with values increasing by more than 1% in each of the nation’s capital cities in May.
The CoreLogic home value index increased by 2.2 percent in May, falling just short of the 32-year high of 2.8 percent recorded in March.
Tim Lawless, research director at CoreLogic, stated that growth conditions remained diverse geographically and across housing types.
“Such a coordinated upswing is extremely rare in Australia’s diverse array of housing markets,” he explained.
Monthly changes in dwelling values varied significantly between capital cities, ranging from a 1.1 percent increase in Perth to a 3.2 percent increase in Hobart.
Conditions were more varied across non-capital city regions, with regional NSW leading monthly gains of 2.5 per cent and regional Western Australia posting the weakest result of 0.1 per cent.
Lawless stated that the combination of improving economic conditions and low interest rates has maintained consumer confidence, which has resulted in persistently high housing demand.
“At the same time, advertised supply continues to be significantly lower than average,” he added.
“This imbalance between demand and supply continues to fuel buyer urgency, putting upward pressure on housing prices.”
The booming housing market in Australia
Australia’s booming housing market has resulted in the economy’s highest level of home loans in more than two years.
According to Reserve Bank of Australia credit data, total housing loans increased by another 0.5 percent in April, bringing the annual rate to 4.4 percent, the highest level since January 2019.
Mortgages to owner-occupiers increased by 0.6% to 6.2% annually, while investors appear to be returning after a prolonged absence.
Annualized growth in investor loans increased by 0.4% to 1.1%, the highest rate since December 2018.
The RBA and other financial regulators are closely monitoring housing market developments to ensure lending standards do not deteriorate during a period of sharp price increases.