Australian Housing Market Remained Strong During 2021’s 2nd Quarter
With the pandemic still affecting the housing market by imposed lockdowns, the Australian housing market still struggles. Nevertheless, growth in home values still continues.
According to CoreLogic’s report, May 2021 showed a stronger result compared to April’s 1.8 per cent surge. However, comparing it with the 32-year high record in March, it’s still weaker when the values surged at 2.8 per cent.
The growth conditions continue to remain broad considering the geographical and housing types and its valuation segments. The values have been up by more than 1 per cent in every capital in May, where both unit and house value lifted across the board.
The data showed a 97 per cent recorded a lift in housing values covering the previous three months. It’s rare to find this upswing across the country’s diverse housing market.
Growth in Capital Cities vs Regional Markets
From February to May 2021, the growth conditions in capital city home values grew significantly higher compared to regional markets. As a result, the capital city’s combined index increased by 2.3 per cent in May – notably higher than the combined regional areas’ 2 per cent rise.
In the capital cities, the monthly rise in property values ranges from 1.1 per cent in Perth to 3.2 per cent in Hobart. As to non-capital city regions, regional NSW led a 2.5 per cent monthly gain, while the values in regional WA had the weakest result of -0.1 per cent.
The Drivers of the Australian Housing Market Amidst the Pandemic
CoreLogic believes that the fundamentals driving the strength in the housing market remain strong.
Mr Tim Lawless of CoreLogic said that the combination of the economic improvements compared to last year, plus the low-interest rates offered, inspires consumer confidence – creating a persistently strong demand for housing. The advertised supply likewise remains below the average. The urgency the buyers feel is possibly due to the demand and supply imbalance, adding to the upwards pressure on housing prices.
The underlying trends shifted over the past year, with the most expensive end of the market having the highest price rate appreciation in most capital cities. The growth cycle it had early on was the most affordable end of the market that was the strongest.
The Strongest and Weakest Performers Across the Housing Markets
Smaller capital cities led the housing market out of the pandemic slump. Nonetheless, Sydney still recorded the biggest capital gain from February to May 2021 at 9.3 per cent.
In May 2021, the annual growth rate in smaller capitals is generally higher:
- Regional Tasmania’s values are 18.1 per cent higher
- New South Wales is now up to 18.6 per cent
- Darwin, which cracked a 20 per cent annual growth in May, now has 20.3 per cent higher
On the other hand, the weakest housing markets since the pandemic disrupted the country are:
- Regional Western Australia with a 0 per cent growth
- Melbourne with only 5 per cent growth
The lockdowns in Melbourne keep dragging down the housing market since it restricts people to move around freely. Nonetheless, positivity may still come to light by looking at the numbers in other areas like Sydney and Darwin.
Their significant growth remains a great sign that if Melbourne is able to be free from the restrictions, they might have a better chance at increasing its 5.0 per cent growth.
Starting Your Own Home Investment
The continuous demand for homes across the country proves that Australians are now more confident compared to 2020. The Australian housing demand reflects how home loans adjusted their terms to assist Aussies, so they can start investing.
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