Hobart and Sydney markets lead the way as property values climb higher in March

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Property values across the country continued on their upward trajectory last month according to the latest figures from Corelogic, and it was the Hobart and Sydney markets leading the surge.

During March Corelogic’s national home value index rose by a considerable 2.8% which, the property data provider says, is the ‘fastest rate of appreciation’ recorded since October 1988.

Home values increased across every capital city by at least 1.5% during the month, though Hobart and Sydney recorded the largest gains. The harbour city led the way with a 3.7% increase in March, while values in Hobart rose by 3.3%.

That increase added $32,000 to the median home value in Sydney compared to the February figure, with the median value now sitting at $928,028.

“The last time Sydney housing values recorded a quarterly trend this strong was in June/July 2015. Following this brief surge, the pace of growth rapidly slowed as limits on investor lending kicked in to slow the market,” said CoreLogic research director, Tim Lawless.

Australian home value changes - Corelogic Home Value Index (March 2021)

MonthQuarterMedian value
Sydney3.7%6.7%$928,028
Melbourne2.4%4.9%$736,620
Brisbane2.4%4.8%$548,260
Adelaide1.5%3.2%$486,555
Perth1.8%5.0%$505.850
Hobart3.3%7.6%$548,686
Darwin2.3%5.4%$451,408
Canberra2.8%6.0%$727,032
Combined regional2.5%6.3%$448,819
National2.8%5.8%$614,768

With the market booming, questions are once again being raised about housing affordability though.

New research released last week by the National Housing Finance and Investment Corporation (NHFIC) revealed that of potential first home buyers in Hobart and Sydney, the bottom 60% of income earners would only be able to afford 10-20% of properties in their respective market.

Likely compounding this further is the fact that the research is based on data from June 2020 - well before the latest round of price rises.

So what could take the heat out of the market?

According to Lawless a number of factors have caused hot property markets to cool in years past, including rising interest rates, worsening economic conditions and tighter credit conditions. Though it’s the latter, he says, that is most likely to have an impact this time around.

“Looking at each of these factors, we aren’t expecting a lift in short term mortgage rates any time soon, and the economy has some positive momentum, so the most likely factor that will slow housing conditions is a new round of credit tightening along with housing affordability becoming more of a challenge, especially for first home buyers,” he said.

“While a new round of macroprudential policies is looking increasingly a matter of when not if, the catalyst for such a policy intervention is more likely to be based on a worsening in the quality of lending standards or increase in mortgage related household debt, rather than as a response to heat in the housing market.

 “Tighter credit conditions would probably have an immediate dampening effect on housing market activity, while continuing to let record low interest rates support the ongoing economic recovery.”

RELATED: Home loan check-in: Are fixed rates on their way back up?

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