CoreLogic’s national home value index has recorded a +2.8 per cent rise in March, which is the fastest rate of growth since October 1988. And according to agents, listings on the market cannot keep up with buyer demand.
National property values: March 2021
| Houses | Units |
|
$643,203
Monthly change: +3.0%
|
$547,543
Monthly change: +1.9%
|
According to the real estate data giant, the current strength in growth conditions remains ‘broad-based,’ with home values surging by at least +1.4 per cent across every capital city and ‘rest-of-state’ region.
Sydney and Melbourne have now recovered from earlier downturns, and with the acceleration in capital gains across Sydney and Melbourne, values have started to outpace many of the smaller capitals that were previously leading the charge.
While regional Australia is still experiencing an upswing in growth, for the first time in a year, capital city housing values have outperformed their regional counterparts, recording a +2.8 per cent lift compared with 2.5 per cent across the combined regionals.
That’s not to discount the performance of regional values, which still remains extremely strong. Gains were highest in regional New South Wales.
According to CoreLogic’s research director, Tim Lawless, housing values in regional areas are +11.4 per cent higher over the past year, which demonstrates the earlier stronger growth trend we saw.
“Capital values are now 4.8 per cent higher on an annual basis with the acceleration of growth evident in March,” he said.
The current boom continues to be house-led, with houses outperforming units for capital gains. Nationally, houses edged +3.0 per cent higher over the month, while units were up +1.9 per cent.
According to Mr Lawless, the inner-city unit markets of Sydney and Melbourne have “turned a corner” — citing two consecutive months of rising values for Sydney units, and a consistent uplift in values seen across Melbourne unit markets since October 2020. Mr Lawless says that this trend has accelerated over recent months.
In comparison to past booms, CoreLogic’s head of Australian research Eliza Owen says that this time around it’s not investors driving property values, but rather a greater presence of owner-occupiers in the market.
Rental market update
Darwin and Perth are now the tightest rental markets in the country.
Rental market conditions remain diverse across the country, with significant differences between regions and property types.
Right now, the tightest rental markets are Darwin (up +5.9 per cent) and Perth (up +7.7 per cent), where both houses and units have recorded double-digit annual rent price growth.
According to Mr Lawless, the surging prices of rentals in Perth and Darwin started in September 2020.
“The monthly growth in rents across Perth quickly accelerated from an already high 1.1 per cent in September 2020, to 2.0 per cent by March 2021.
“Darwin rents have risen by an average 2.1 per cent per month for the past seven months, including a 2.4 per cent lift in March 2021.
“Both these markets have seen a recent history of low housing investment which has kept rental supply low at a time of rising demand,” he said.
Weaker conditions are being felt in the unit sector compared to houses across each capital city. Since March last year, capital city house rents are up +5.2 per cent, while unit rents are down by -3.8 per cent.
The unit sectors suffering the most right now are the inner-city apartment markets of Sydney and Melbourne which have copped much of the brunt of stalled overseas migration. However, according to Mr Lawless, conditions in these markets are beginning to stabilise.
“Sydney unit rents have posted a subtle rise over the past three months, while unit rents in Melbourne have held firm over the same period.
“The improvement comes after a long running decline, however a material improvement in rental conditions is likely to be dependent on foreign students and visitors returning to shore up inner city unit rental demand,“ he said.
CoreLogic notes that most regions are still showing a gross yield that is higher than typical mortgage rates, implying that some regions are ripe for positive cash flow investments.
What is the outlook for the property market in the months ahead?
Well, there’s no doubt about it. The market, across the board, is in the midst of a boom. Across CoreLogic’s home value index, every single capital and ‘rest-of-state’ region recorded a rise in value.
Low interest rates and recent economic conditions are still amongst the biggest drivers of growth, along with a low level of listings on the market which is ensuring a high level of absorption.
Forecasters are continuing to predict double digit growth for property over the next two years, but given that housing affordability is once again seeping into the national conversation around real estate, questions around what is likely to happen to prices are swirling.
It’s inevitable that at some point, price growth will slow. What eventually causes this is nothing more than speculation at the moment. But it could be one of three things:
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Regulators stepping in to tighten access to credit – though according to APRA, standards are currently healthy so credit intervention is not an option right now.
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Rising interest rates — though a rise isn’t expected anytime soon.
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Weak economic conditions — as fiscal support has been tapered back, there may be less demand from buyers.
Article Source: www.openagent.com.au
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