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26 May, 2021
Home value growth loses steam in April
Corelogic says “Home values continue to rise but the pace of growth loses steam in April’
According to CoreLogic’s recent update, Australian house prices grew by 1.8% in April, representing an easing in the speed of house price growth across the country compared to a 32-year high of 2.8 percent increase over March. “Although growth conditions have slowed, housing values are still rising at a rapid pace, up 6.8% over the past three months to be 10.2% higher than the COVID low in September last year”, CoreLogic reported.
According to CoreLogic’s Research Director Tim Lawless, house price growth could slow down in the coming months as record prices put pressure on housing affordability.
“The slowdown in housing value appreciation is unsurprising given the rapid rate of growth seen over the past six months, especially in the context of subdued wages growth,” he said
With housing prices rising faster than incomes, it’s likely price-sensitive sectors of the market, such as first home buyers and lower-income households, are finding it harder to save for a deposit and transactional costs,”
With the Australian Bureau of Statistics reporting that first home buyer loans fell by 4 percent in February, there is already some evidence that the market is seeing fewer first-time buyers.
However, despite the slowdown, positive property market conditions continue to exist throughout the country, with every capital city and ‘rest-of-state’ area recording an increase in dwelling values over the month. Darwin and Sydney recorded the largest rise in property values, at 2.7 percent and 2.4 percent respectively.
“Total advertised stock levels were 25 percent below the five-year average in late April. Such low total listing numbers, at a time when new listings are above average, reflects the strength of buyer demand, fuelling the current rapid rate of absorption,” Lawless said.
“Prospective vendors are likely becoming more motivated to test the market thanks to such strong selling conditions as well as housing prices pushing to new record highs in most areas.”
Therefore, there are good reasons to believe that housing value will continue to grow throughout 2021 and to 2022, albeit at a gradually slower pace. The expectation that mortgage rates will stay at record lows for an extended period of time, as well as the ongoing high levels of consumer confidence as the economy grows at a faster-than-average pace, should boost demand even further.
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