Home price growth hits 17-year high, but property market may be losing steam: CoreLogic

australian-house-in-the-bush

New figures from CoreLogic have confirmed what many Australians already knew: property prices have surged in the past year.

Released on Thursday, CoreLogic’s latest Home Value Index revealed that national home values rose by 13.5% over the 2020/21 financial year - the largest increase in over 17 years.

As a result, the median home value in Australia has jumped to $645,454, while the median value in Sydney - the nation’s most expensive city - is now sitting just under the $1 million mark at $994,298.

“This is the highest annual rate of growth seen across the Australian residential property market since April 2004, when the early 2000’s housing boom was winding down after a period of exceptional growth,” said CoreLogic’s head of research for Australia, Eliza Owen.

The latest CoreLogic data comes just weeks after the Australian Bureau of Statistics (ABS) released its quarterly property figures which showed that the total value of residential dwellings in Australia had ballooned to a new record $8.29 trillion.

Darwin and Hobart lead the pack

Interestingly, it was Australia’s smaller capital cities and regional areas that notched the highest price growth rates over the past year.

Darwin led the way with a 21% annual increase followed by Hobart (19.6%) and Canberra (18.1%), but these cities were followed by regional areas, which CoreLogic found had a ‘combined’ annual growth rate of 17.7%. 

Meanwhile, It was a tale of two different growth rates for Australia’s largest cities, Sydney and Melbourne.

A surge in growth over the past six months in particular helped Sydney record an annual growth rate of 15%, while Melbourne’s annual growth rate was a more subdued 7.7% - the lowest of all markets.

Australian home value changes - CoreLogic Home Value Index (June 31, 2021)

MonthlyAnnualMedian value
Sydney2.6%15%$994,298
Melbourne1.5%7.7%$753,100
Brisbane1.9%13.2%$586,142
Adelaide1.6%13.9%$508,712
Perth0.2%9.8%$526,168
Hobart3.0%19.6%$607,960
Darwin0.8%21%$475,083
Canberra2.3%18.1%$770,873
Combined regional2.0%17.7%$478,212
National1.9%13.5%$645,454

Is the rate of growth finally easing?

As the CoreLogic figures in the table above show, national home prices increased by 1.9% over the past month, with each city and region experiencing varying levels of growth.

However, according to Owen, signs are emerging which suggest that markets are starting to lose momentum. For example, Perth (0.2%) and Darwin (0.8%) both had more subdued rates of growth over the past month, especially compared to the levels recorded in each city earlier in the year. 

“CoreLogic monitors a ‘sales to new listings’ ratio, which divides the monthly volume of settled sales by new listings brought to market,” Owen explained.

“For the past three months, the sales to new listings ratio has averaged 1.1 across Darwin and Perth. While the implication is that there is 1.1 sales for each new listing, which could be enough to elicit further growth in dwelling values, these are the lowest sales to new listings results of the capital city markets.”

Price growth in the ‘top 25%’ of the market for all capital cities also fell compared to the previous month, which could be a barometer for other sections of the market. 

“This easing in the pace of growth at the top end of the market is another clear sign of a shift in momentum. The rest of the market tends to follow movements at the high end, and this is the first time in nine months that the high-tier growth rate has not accelerated,” said Owen.

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