Australian housing prices have grown by more than 500 per cent during the past 25 years.
According to data from REIA, capital values have lifted from $160,000 in 1996 to $825,000 in 2020.
Housing prices spiked by 25 per cent in the past five years, from a median of $683,000 to $825,000, while other dwellings rose by 10 per cent to $600,000.
During the 25 years, Australian housing yields tightened from 5.1 per cent to 2.9 per cent while other dwellings recorded a drop in yields from 5.2 per cent to 3.7 per cent.
Houses in Darwin had the highest return, averaging 4.2 per cent, while Melbourne and Sydney had the lowest yields, both falling from around 4 per cent in 1996 to just 1.8 per cent in 2020.
House prices now look on track to surge again as buyers take advantage of record low-interest rates, low levels of immigration, government programs and utilise money saved during the coronavirus recession.
▲ Across the combined capital cities, 874 homes were taken to auction over the weekend making it the busiest Easter on record.
The signs already look good for a strong price rally in 2021 after the east coast-dominated residential market finished 2020 strongly, with more buyers entering the market as listings remained low.
Across the December quarter, the weighted average capital city median price increased by 6 per cent to $825,205 for houses and 0.9 per cent for other dwellings.
Owner-occupiers have driven the boom with new loans up 80 per cent since May, although investor activity is starting to grow with a 9.4 per cent increase in January, the strongest monthly result since September 2016.
“Despite rising vacancies and the low yields, we are starting to see investors re-emerge as they respond to a rising market with further growth expectations and low borrowing costs,” REIA president Adrian Kelly said.
ANZ economists expect Sydney and Perth house prices to jump 19 per cent across 2021, with prices in Hobart expected to lift by 18 per cent, Melbourne and Brisbane 16 per cent and Adelaide 13 per cent.
Westpac also upgraded its forecasts for the next two years, tipping 10 per cent gains this year and next year.
▲ Home values continue to rise on the back of ultra-low interest rates, stimulus and the nation’s adept handling of pandemic. Image: Alamy
The RBA said it will keep the cash rate at 0.1 per cent until 2024, despite the bank’s own research finding a permanent cut to rates of one percentage point could push house prices up 30 per cent over three years.
The RBA has said it will only lift interest rates when inflation is sustainably within the 2-3 per cent band.
No action has been taken by regulators who say high lending standards continue to be maintained, however prices and loan activity will continue to be under scrutiny.
The last time house prices nationally lifted so much was in the late 1980s in a property boom that was ended by double-digit interest rates and the 1990-91 recession.
SQM Research managing director Louis Christopher said recent price increases had not been supported by the fundamental dynamics of supply and demand, but low interest rates.
AMP chief economist Shane Oliver said recent prices increases in the face of low immigration suggested that an impending oversupply could be on the horizon.
“Without immigrants coming in, the underlying demand will be running below supply which will lead to rebalancing,” Oliver said.
“[This] massive pandemic inspired demand for houses [has also been] helped along by HomeBuilder which ends this month,” Oliver said.
Article Source: theurbandeveloper.com
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