Why Residential Property Prices Are Rising
Despite coming out of a recession in recent months, the Australian property market has been performing surprisingly well. Over the last few months, media outlets across the nation have been reporting on the predictions of leading economists and market analysists who believe that the Australian property market could increase by as much as 17% this year alone.
In the December 2020 quarter, it was reported by the ABS that all capital cities in Australia recorded a increase in residential property prices. Across the board, it increased by 3.0 per cent. The ABS's media release stated that the total value of the 10.6 million residential dwellings across the country increased from $257.9 billion to $7,724.4 billion. Thus, putting the average residential dwelling at $728,500.
So, what's causing it?
There are various factors contributing to the exponential growth of the residential housing market. From the growth of total housing finance commitments, record-low stock, and even lower interest rates are some of the factors that are fuelling price rises. Other factors that are contributing to this outcome include; consistent auction clearance rates, falling bank loan deferrals, low COVID cases and increased consumer confidence.
As mentioned, despite being in a pandemic led recession last year, various factors contributed to the strong economic upturn. The Federal and State Government's contributed various stimulus measures which are now leading to significant growth in the property market. These measures included the $90 Billion being poured into the JobKeeper program, $25,000 HomeBuilder Grant, mortgage deferrals and various other grants and direct stimulus checks.
Where do house prices currently sit, and where are they projected to go?
As at 31 March 2021, the average residential dwelling price across Australia's capital cities are at the following:
Sydney - $928,028 (up 5.4%, year-on-year average)
Melbourne - $736,620 (up 0.7%, year-on-year average)
Brisbane - $548,260 (up 6.8%, year-on-year average)
Perth - $505,850 (up 6.0%, year-on-year average)
Adelaide - $486,555 (up, 8.6%, year-on-year average)
Hobart - $548,686 (up 12.5%, year-on-year average)
ACT - $727,032 (up 12.1%, year-on-year average)
Darwin - $451,408 (up 14.2%, year-on-year average)
By the end of 2021, the ANZ Bank predicts that we will see house prices to increase by 19% in Sydney and Perth and 16% for Melbourne, Brisbane, Canberra and Darwin. As for Adelaide, the increase to housing values are expected to reach 13%. Though, they believe that the rising prices of the residential market will slow down dramatically (by 6%) in 2022.
Looking to make the most of the property market?
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