Home prices hit 18-year highs in Australia

National home prices rose at their fastest pace in nearly 18 years during the March quarter, according to property listings site Domain.

The national median rose 5.7% in the first three months of the year to a record high of $ 899,509 – a 10% increase from the same period last year.

The sharp rise marked the second consecutive quarter in which house prices rose in all capitals – something which, according to the Domain’s senior research analyst Nicola Powell, had not happened since 2009 after the crisis. global financial.

“Historically low interest rates, better household savings, low listing volumes, post-lockdown lifestyle changes, consumer sentiment soaring to an 11-year high, the return of cashed expats and government incentives fueled housing demand and strong market performance, ”Dr. Powell said in a statement.

Sydney and Canberra recorded their strongest quarterly house price growth in nearly three decades, with the median of the former reaching $ 1.31 million and the latter reaching $ 928,000.

Meanwhile, median home and house prices in Melbourne hit new highs of $ 974,000 and $ 569,000 respectively.

Overall, house prices in capital cities in the March quarter were 6.2% to 19.5% higher than the same period last year.

But unit prices were less dynamic.

During the March quarter, median unit prices fell in Brisbane (-0.5%), Hobart (-0.8%), Canberra (-5.0%) and Darwin (-1.8%).

And over the year, they increased in all capitals except Brisbane and Hobart – although to a much lesser extent than the growth in house prices.

The data comes two weeks after Domain revealed that rent prices had risen three times faster than wages during the pandemic – pushing home ownership beyond the reach of even more Australians.

Although data from the field shows house prices hit a new high in the March quarter, there are early signs of a market slowdown.

Data from real estate analysis firm CoreLogic shows values ​​in Sydney, Melbourne, Perth and Brisbane rose at a slower pace in April than in March.

In March, prices rose 3.7% in Sydney, 2.4% in Melbourne, 1.8% in Perth and 2.5% in Brisbane.

But in the 28 days leading up to April 25, those growth rates had fallen to 2.2%, 1.3%, 1.1% and 1.7% respectively.

AMP Capital chief economist Shane Oliver said the slight slowdown was likely due to a combination of factors – although he cautioned against over-reading given that prices soared in March. .

“This was the fastest increase since 1988, so there was a need to slow down from that,” Dr Oliver said. The new daily.

“I think there was an element of pent-up demand as well.”

Dr Oliver said a slight increase in registrations in recent weeks contributed to the marginal slowdown in April.

But he said that even if prices were rising at a slower rate, they would continue to rise and likely would continue to do so.

“I think what you are seeing is like a natural downturn,” he says.

“Until we see all the incentives removed and interest rates go up, it’s hard to see prices go down.