Property prices rising at fastest pace since June 1989, says CoreLogic

Child running to their dad across the lawn as mum watched from the house's patio

Australian property prices are experiencing the fastest annual rate of growth since June 1989, but gains have slowed in recent months and there are signs the market will continue to lose steam.

According to property research firm CoreLogic, national dwelling values rose by 1.5% in September, having eased considerably since hitting 2.8% in March. 

Overall, Australian residential property prices are up 17.6% over the first nine months of the year and 20.3% over the past 12 months.

CoreLogic’s research director, Tim Lawless, attributed the slowing growth conditions to the increasing barriers to entry homebuyers now confront. Home values are rising at a faster pace than incomes, making saving up for an initial deposit much more challenging. 

“Sydney is a prime example where the median house value is now just over $1.3 million. In order to raise a 20% deposit, the typical Sydney house buyer would need around $262,300,” he said.

Australian home values changes - CoreLogic Home Value Index ( 30 September 2021)

MonthlyAnnualMedian value
Sydney1.9%23.6%$1,056,093
Melbourne0.8%15.0%$775,142
Brisbane1.8%19.9%$625,291
Adelaide1.9%19.1%$529,376
Hobart2.3%26.8%$659,622
Darwin0.1%20.2%$481,767
Perth0.3%18.1%$524,589
Canberra2.0%24.4%$838,904
Combined regional1.7%23.1%$503,609
National1.5%20.3%$674,848

Though recent lockdowns may have dampened consumer sentiment, prices have largely been unaffected by the restrictions. As the price of dwellings increases, many first home buyers will find themselves unable to enter the market. 

“The slowdown in first home buyers can be seen in the lending data, where the number of owner occupier first home buyer loans has fallen by -20.5% between January and July,” said Lawless.

“Over the same period, the number of first home buyers taking out an investment housing loan has increased, albeit from a low base, by 45%, suggesting more first home buyers are choosing to ‘rent vest’ as a way of getting their foot in the door.”

Concerns that borrowers are overextending themselves have given way to calls for regulators to clamp down on soaring household debt levels. Recently, CBA chief executive Matt Comyn called on banks to proactively tighten their lending standards.

Runaway debt was also a topic of discussion in the latest meeting of the Council of Financial Regulators. In a statement released on Wednesday, the CFR revealed that APRA intends to release a framework for introducing macroprudential controls in the coming months.

It is still unknown what shifts in regulatory policies will come out of these concerns, but if you’re looking to buy your first home check out Mozo’s first time buyer hub to get information on the home buying journey.

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